SYDNEY May 8 Australia will hold an inquiry
into competition in the country's financial system, following a
series of scandals in the banking sector and public allegations
against the "Big Four" banks of abuse of market power.
The latest inquiry is part of a number of government
measures since last year aimed at alleviating public concerns
about the power of the big banks, after revelations of
misconduct in the industry.
Australia's four major lenders - Commonwealth Bank of
Australia, Westpac Banking Corp, ANZ Banking
Group and National Australia Bank - have come
under fire recently following several scams involving misleading
financial advice, insurance fraud and interest-rate rigging, as
well as for refusing to pass on official interest rate cuts in
The four together control 80 percent of Australia's lending
market and have posted record profits for years. Westpac, NAB
and ANZ all reported a rise in half-yearly cash profits this
month, taking their total to about A$8.5 billion. CBA will
report limited third-quarter figures on Tuesday.
"The high concentration and degree of vertical integration
in some parts of the Australian financial system has the
potential to limit the benefits of competition...and should be
proactively monitored over time," Treasurer Scott Morrison said
in a statement on Monday.
"The Government is committed to ensuring that Australia's
financial system is competitive and innovative. That is why I
have tasked the Productivity Commission to hold an inquiry into
competition in Australia's financial system."
The inquiry will consider the degree of concentration in key
segments of the financial system, examine barriers to innovation
in the system and look into competition in personal deposits and
mortgages for households and small businesses.
The Productivity Commission will commence the inquiry on
July 1, and the final report is likely to be presented to the
government within 12 months of that, Morrison said.
Last year, the government used its one-seat majority in
parliament to avoid a sweeping Royal Commission into banks but
later announced a limited inquiry targeting mistreatment of
small business customers. The government also beefed up the
corporate watchdog's powers, ordered bank chiefs to make annual
appearances before parliament's economics committee and promised
a tribunal to examine citizen complaints.
Australian banks have themselves promised unprecedented
reforms to protect consumers and boost transparency, including
reviewing sales commissions, supporting whistle-blowers and
black-listing individuals for poor conduct.
(Reporting by Swati Pandey; Editing by Sam Holmes)