The founder of a new political party aimed at reforming the major banks has called on brokers to throw their support behind the efforts.
Adrian Bradley, the former head of media for Bankwest and now founder of the Bank Reform Party, said brokers’ interests naturally align with those of the burgeoning political party.
He pointed to brokers’ frustration with the amount of regulation placed upon the mortgage broking sector, while the same standard often does not apply to banks.
“The onus has been placed on brokers to operate within these regulations, and the banks don’t seem to have the same onus. The relationship is so one-sided, and that’s the relationship the banks have with every Australian,” Bradley said.
The party is seeking to level the playing field for brokers and consumers with the major banks.
“That one-sided relationship is wrong. The balance needs to be redressed so brokers can get about with doing business. Brokers have a bigger role to play in channelling business out to a variety of lenders and creating competition,” he said.
The newly-formed party is eyeing seats in the Senate at the next Federal election, where it could serve to stimulate review of the sector. While the party was still in the process of forming its constitution and platform, the key thrust will be better oversight, increased price transparency, the promotion of competition and opening accessible funding to smaller lenders.
Bradley also proposes a review of “the nexus” between banks and administrators, receivers, valuers and lawyers, as well as placing a potential cap on executive pay and bonuses.
“Any oligarchy is good for the oligarchy, but not good for competition and consumers. There’s been a significant market consolidation and reduction of competition, and we don’t think that’s good. We’re looking for more support for non-bank lenders,” he said.
Bradley has vowed the party would not seek to “distort markets” and was not in the business of bank bashing, but instead wanted to promote healthy and profitable banks.
“We need strong banks. They’re the lifeblood of the Australian economy, but they need to be accountable. We’re not a bunch of vandals going in to wreck the banks. We don’t want more regulation; we want better regulation,” he said.
Part of this better regulation would be greater transparency of bank funding costs, and the way they tie to the Reserve Bank cash rate – an issue that is causing much public confusion.
“Banks would say that their funds aren’t tied to the RBA cash rate, and that’s a fair argument. Any business has the right to pass on the cost of funds. But funding costs are a business cost for a bank, and I don’t know of any other business in Australia where the customer is expected to underwrite the business costs. In any other market, if a business did that the customers would leave. But in banking, where are they going to go?” he said.
While Bradley conceded banks would spurn further regulation, he argued that better regulated banks would find benefit from shifting consumer attitudes.
“If we get this right, banks ought to join us. If they promote competition and level the playing field, people will like them. People won’t whinge about banks anymore, and people won’t hate banks.”
He also scorned the idea that a drive for greater oversight was anti-business. “We’re pro-business. We’re also pro-student, pro-housewife, pro-everyone. We’re pro-bank, we just want the banks to work better.”
Bradley said the party was “non-aligned” and wanted to accept members from across the political spectrum. He said brokers could play an important role in aiding the party to achieve its goals.
“Brokers are a sector I’ve been thinking about for quite some time. It’s a sector we’re more than happy to have a dialogue with,” he said.
For more on the Bank Reform Party, check out Australian Broker issue 9.10