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The Greens are calling for a breakup of the country’s banks, following government reports of a lack competition and transparency in the industry.
In the Productivity Commission’s report on the country’s financial system released last week, the government body bemoaned “opaque practices” in the banking industry that harm consumers. For example, it said the standard variable home loan interest rate advertised by ADIs bears no resemblance to the actual interest rates offered to potential borrowers, as the vast majority of consumers pay less than this rate.
The interest rate offered to a borrower is only revealed once they are well into the application process, it added. Home loan packages that bundle home loans with other financial and credit products, such as offset accounts and credit cards, further obscure the actual value and comparability of individual components.
Under the Green’s new proposal, banks will no longer be able to own wealth management businesses that both create financial products and promote them to customers.
The party also said ASIC should be stripped of its responsibility for overseeing consumer protection and competition within the essential services of basic banking, insurance and superannuation and return them to the ACCC. It said customers should be able to easily distinguish between the simple and essential products and services that the vast majority of Australians use—deposits and loans, superannuation and insurance—and the more complex and selective activity that is the domain of big business, the wealthy, and the adventurous.
“[The big banks have] become less like the banks we remember and more like convenience stores: spruiking loans, super, insurance and financial instruments so complex you need a PhD just to understand what they’re for,” said the party in a statement. “Everyone knows that this leads to conflicts of interest that are bad for our economy, but it also leads to mega-profits that become big political donations, so neither of the two old parties want to do anything about it.”
