Regulations introduced by the Australian Prudential Regulation Authority
(APRA) have disproportionately affected competition in the banking sector, skewing the advantage to the big four, said Senator Nick Xenophon.
Speaking at the Community Bank National Conference in Adelaide on 19 September, Xenophon pointed to comments by Bank of Queensland
and Bendigo and Adelaide Bank that the “regulator’s tough new lending rules could actually be curbing competition”.
These measures were also “consolidating the power of the big four at the expense of every other local bank and lending institution in Australia,” he said.
“For instance, the new macro-prudential measures that APRA implemented – no interest-only investor loans and a 10% cap of a bank’s books on investor loans – seem to have the effect of consolidating the market power of the big four, while nobbling everyone else.”
He promised to introduce legislation in the coming year to force the Productivity Commission’s inquiry into banking sector competition to a head by requiring APRA to:
- Include competition in the banking sector within its mandate
- Consider the differences between Sydney and Melbourne and the rest of the nation
- Give weight to the impact that small community banks can have
APRA’s current rules to cool overheated housing markets in Australia’s two major cities are “blunt” instruments that fail to take into account the markets in smaller capitals such as Adelaide, regional cities such as Townsville, and rural towns such as Minyip, he said.
“A more nuanced, calibrated approach is needed, and that could be achieved if APRA is required by law, in its objectives, not only to take into account its financial stability mandate, as it must, but secondary factors such as competition in the banking sector.”
Brokers assisting smaller ADIs: APRA
“Bad regulation costs the community”: ASIC
Rate hikes a result of regulation: APRA