Abacus’ ‘balance banking’ campaign has been slammed by the industry, with one stakeholder labelling it “hypocritical”.
Earlier this week, Abacus called for a national debate and an independent review of the country’s banking system after research revealed banking competition is a major issue for voters.
A poll of 1,000 Australian voters by D&M Research showed that two thirds are in favour of an independent inquiry into the country’s banking system.
“Australians are angry about the dominance of the major banks,” Abacus CEO Louise Petschler said. “The Balance Banking campaign will lobby for change to address the imbalance in banking, through a national debate and independent review of our banking system.”
But the company’s plans to launch an “independent review of the banking system” have been shot down by CreditED chairman Kym Dalton.
According to Mr Dalton, calls for “Banking Balance”, level playing fields and ‘greater competition ‘in Australia’s banking and mortgage markets are oxymoronic.
“Levelling the playing field to enable smaller lenders to ‘compete’ will probably involve government intervention which tends to have an anti-competitive impact,” he said.
“Intervening in lawfully operating markets to ‘improve competition’ by making some entities less competitive isn’t about improving competition- it’s market manipulation to improve the economic prospects of one group at the expense of another.”
“We also need to think about what is meant by ‘improving’ or ‘increasing’ competition? What does ‘more competition’ actually mean?”
Mr Dalton believes calling for more competition in the mortgage market is really a euphemism for a desire for ‘cheaper rates’ to stimulate a languishing residential real estate market.
“It would really assist to further the debate if people didn’t hide their intent behind euphemisms like a better balance, greater competition or level playing fields.
“Things like stalling First Home Owner lending activity may have little to do with the need for ‘greater competition’ in the form of cheaper rates, and more to do with macro features such as a lack of a desire amongst the young to acquire traditional free standing residences remote from metropolitan centres, with a mortgage that requires a significant proportion of dual income take home pay to service.
“With fundamental demographic and attitudinal changes toward residential property well underway in Australia, for the younger cohorts of our society, even if you build a level playing field of dreams, they may not come.”