“You’ve got the Labor Party calling for a Royal Commission, you’ve got the Liberals doing their thing, but at the end of the day, you’ve got four major banks taking most of the business. Realistically, competition is the only thing that will force them to change their attitude.”
In an interview with Australian Broker
, Kim Cannon
, managing director of Firstmac, discussed what he saw as a vital matter of national interest: stifled competition in the banking industry.
While the Firstmac-owned Loans.com.au had made strides into the mortgage market, Cannon talked of his plans to expand Firstmac into other banking products such as credit cards.
The hurdle to doing this, he said, was that current regulations made getting a licence impossible.
“The way the banking ownership laws are stated at the moment: no private individual can own more than 15% of the bank.”
These regulations were put in many years ago, meaning that they now needed to be changed to adapt to today’s digital world. Unfortunately, Cannon said he had tried and failed to convince the Australian Prudential Regulation Authority
(APRA) of this need.
“We’ve been in discussions over the years with APRA and they just don’t want to do it. They won’t even recommend it to the Treasurer because it’s not in the national interest to make people like me wealthy. That was their comment.”
A call to arms
Cannon said that brokers could be doing a lot more to help bring greater competition to the marketplace. However, he also believed that 80% of the business that brokers created went directly to the big four banks.
“The brokers aren’t assisting with competition either. They’re just churning customers back to the same old banks,” he told Australian Broker
. “There needs to be more competition out there but until the brokers get away from giving most of their business to the banks, that’s never going to happen.”
He said there was a “comfort zone” that brokers needed to escape from before any real change could be implemented.
“I’m just one person, one company. Competition’s got to come from the whole industry and it’s got to be looked at otherwise the big four will keep on doing what they’re doing.”