Small banks believe a lack of competition is contributing to inappropriate conduct by bigger rivals and poor quality products for their customers.
In its submission to the Productivity Commission's inquiry into competition in the Australian financial system, the Customer Owned Banking Association says the sector does not have sustainable competition at the moment.
"A lack of competition can contribute to inappropriate conduct by firms, and insufficient choice, limited access, and poor quality products for consumers," director of policy Luke Lawler said in a statement on Tuesday.
Treasurer Scott Morrison tasked the Productivity Commission with the review as part of the response to the financial system Inquiry conducted by former banker David Murray.
It considers how to improve consumer outcomes, the international competitiveness and productivity of the system and economy more broadly.
The commission is due to report back in July next year.
Mr Lawler believes the present regulatory framework has entrenched the dominant position of the big banks and promoting a more competitive system would not put financial stability at risk.
The association also says that while it has no doubt the banking regulator gives consideration to competition concerns, it believes there has been a lack of urgency in addressing market distortions caused by the unfair funding cost advantage enjoyed by the major banks.
It says its members - credit unions, building societies, and mutual banks - offer the full range of retail banking products and services and calls for cost-effective measures to empower consumers to be able to switch between financial institutions.
Share
