Big banks come under fire again

Now, the Customer Owned Banking Association has echoed this view in its submission to the Financial System Inquiry.

The association called on the federal government to level the playing field by scrapping taxpayer subsidies for the big four banks.

It said this would “generate genuine competition and choice for consumers, and deliver better prices, customer service and innovation”.

Golden Eggs Home Loans’ general manager, Max Phelps, said the big four’s dominance was harming borrowers.

Mr Phelps told The Adviser that the big banks were “near identical” on products and pricing – and that their large profits meant they had little incentive to change.

However, Tailored Lending Concepts owner Stephen Rasmussen warned that borrowers would not necessarily benefit if the market share of the big four was substantially reduced.

“[Having a] lot of competitors in the market doesn’t automatically equal best result for consumers,” he said.

“A degree of competition is good - competitors have to be able to play on an equal field - but they still have to be efficient enough to provide the product and service that the customer needs, and if you’ve got too many little players, it becomes a niche business.”

Moneybag Finance director Simone Ryan said the big four’s market share was beneficial because it allowed them to advertise regularly.

She told The Adviser that this educated borrowers about the different products and rates available to them.

She also said this was good for brokers “because it gives us a platform for comparison to provide consumers with options for second-tier lenders and mortgage managers”.