Level the playing field in banking

Published on July 4th, 2013 by Andrew McBay.

A public debate on financial policy might not be the most exciting thing on your radar (at least I hope it’s not), but it’s certainly one of the most important. Abacus, the industry body for customer owned banking, sure thinks so… and so do I.

Abacus says the banking system is severely out of balance. They have launched a nationwide campaign for an independent inquiry into the financial sector to ensure consumers benefit from greater competition.

Smoke and mirrors!

Is the banking system really that unequal? The answer is yes. Changes to government regulation to promote consumer confidence in the wake of the Global Financial Crisis have greatly reduced competition. It benefitted big banks at the expense of credit unions and other small lenders.

Walking up the high street, you probably see loads of bank brands and think “Why, I have my pick of the litter!” Unfortunately, that couldn’t be further from the truth. The big banks own several sub-brands, which can be very misleading. For example, Commonwealth Bank owns Bankwest and Aussie Home Loans, and Westpac owns Bank of Melbourne, Rams and St. George.

The worrying fact about this is that currently they don’t have to disclose it to you, the customer. The result? Confused, worse-off consumers THINK they’re getting a better deal at a small bank, but are really still at the mercy of the big ones.

The worrying fact about this is that currently they don’t have to disclose it to you, the customer. The result? Confused, worse-off consumers THINK they’re getting a better deal at a small bank, but are really still at the mercy of the big ones.       

So, when someone asks why we have the most profitable banks in the world, you’ll know the answer: because we have the highest margins. The difference between the cost and delivery of the money is too great and only competition will bring these prices down.

What’s good for the goose…

A more competitive sector that supports smaller lenders will bring down prices for consumers. I fully support this as it’s in line with what we’re always doing here at The Money Room – getting our clients’ the best deal possible.

More importantly, it can only help drive the economy forward. More competition means more affordable financing, which means more consumer spending, which means more growth.

To learn more about this important issue, check out the Abacus website or get in touch with us today. We’re always on hand to provide advice, and our brokers can help you navigate the playing field to find the best deal possible.

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