Bendigo and Adelaide Bank says that it’s time the financial services industry was on an even playing field.
At the bank’s Annual General Meeting, managing director Mike Hirst called for the Abbott Government’s financial services inquiry to prioritise industry regulation, and stop hurting smaller players.
Hirst said that they have had to fight with one hand tied behind their back, as regulatory intervention has often favoured larger industry participants.
“It should be obvious that the impost of regulation is more acute the smaller an institution is, simply because there is a certain fixed cost of regulation that is diluted depending on how many transactions it is spread across – it’s just unit costing after all,” he said.
Hirst said that while Australia’s financial sector is very competitive, size is a powerful ally in any endeavour.
“In our industry it provides larger players with funding and regulatory advantages that ultimately restrict consumer choice,” he said.
Chairman Robert Johanson agreed that the position of the major banks was quite dominant, even as they compete vigorously between themselves.
“This no doubt enhances the stability of the system but it is at the expense of an open market where new entrants are possible,” he said.
Johanson said the emergence of new technologies also has the potential to challenge the industry.
“The biggest competitive threats to banks now come from non-banks in areas like payments systems where companies, unrestrained by regulatory burdens and compliance, can pick lucrative niches to exploit.”
“To retain our unique position in the marketplace, we must continually adapt, grow and improve. That’s a real focus for our bank,” he said.
One possible outcome of the review would be a framework to help the industry prioritise regulation. Hirst believes that there should be a hierarchy of priorities for the government, industry and regulators to work towards.
RBA Governor Glenn Stevens shared this view when he said “…this is not a call for current reform efforts to stop, or to be watered down” but “It is about ensuring we focus our finite energies and resources on the most important problems, and get industry to do the same.”