Push for more competitive banking sector

A bill the government says will help start-up banks enter the financial market leading to a more competitive banking sector has passed the lower house.

Legislation to increase competition in the banking sector and help start-up banks enter the financial market has passed its first hurdle.

Liberal MP Alex Hawke said the bill would result in "better quality and lower priced products," as it passed the lower house on Tuesday.

The bill makes changes to ownership restrictions for banks, credit unions, building societies and insurance companies, and would allow start-ups to gain restricted licenses for two years to prove themselves.