AN INDEPENDENT inquiry into Australia's banking industry is essential to provide more competition for consumers, says a report from the nation's mutual finance industry released on Monday.
The Deloitte Access Economics report, commissioned by Abacus, the nation's representative body for credit unions and building societies, showed an emphasis on stability in the banking sector was reducing competition.
There has been a long-running battle for market share between the big four banks - Westpac, Commonwealth, ANZ, National Australia Bank - and the mutual funds sector.
The report, released on Monday, argued that a Federal Government policy focus on creating a stable financial system was letting down consumers by reducing competition for everything from mortgages to small business loans.
Abacus chief executive Louise Petschler said the banking sector had not been reviewed since the 1997 Wallis inquiry and it was now "time to have an in-depth inquiry to improve competition and get a better deal for consumers".
"Deloitte Access Economics has shown that cheaper funding costs for major banks and more regulatory burden on smaller players has led to less competition," she said. "Without sensible review and action, this will lead to less choice and worse outcomes for Australian consumers in the future.
"An extensive and independent inquiry would be a positive step to improve banking completion and better protect the financial system for all Australians from future global economic uncertainty."
While the report acknowledged changes the government had already made to improve the standing of the smaller banking sector, it called for a more rigorous investigation of the domestic financial sector.
"Australia has the luxury of a banking sector that is strong and stable - it puts us in the perfect position to review our framework and ensure that our banking sector remains strong and competitive for the decades ahead," Ms Petschler said.
"We must take the opportunity to conduct this review now."
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