Australia's government called for more banks to challenge the industry's oligopoly, after the country's top economic adviser said the "Big Four" lenders' market dominance has been detrimental to customers.
The remarks from Treasurer Scott Morrison demonstrate the increasingly strident tone the conservative government is taking with an industry it has traditionally supported, as a powerful public inquiry airs allegations of fraud, deception and fee-gouging across the finance sector.
"The answer begins, but certainly doesn't end, with more players in the market," said Morrison in a speech to construction industry representatives. "What this means for the customer is simple: cheaper loans, cheaper products."
Australia's four biggest lenders are Commonwealth Bank of Australia (CBA), Westpac Banking Corp, Australia and New Zealand Banking Group Ltd (ANZ) and National Australia Bank Ltd (NAB). Together, they control about 80 percent of the country's deposit and home loan markets, making them some of the world's most profitable banks.
But revelations during the Royal Commission inquiry into the financial sector, now just over halfway through its year-long schedule, have seen the four collectively lose over A$17 billion ($12.53 billion) in market value since the inquiry's February start.
Morrison had resisted calls for the inquiry, saying existing regulations were sufficient, before a series of scandals in the sector prompted a change in stance in late 2017. "Banks have made this mess for themselves," Morrison said in the speech. "They should play a key role in cleaning shop."
Earlier on Friday, the government published a report on the sector compiled by the Productivity Commission (PC), which said banks not disclosing bonuses for mortgage brokers or financial planners for marketing their products resulted in poor outcomes for customers.
"What often is passed off as competition is more accurately described as persistent marketing and brand activity designed to promote a blizzard of barely differentiated products," the advisory body said in the 680-page report. It said the Australian Prudential Regulation Authority (APRA) had not sufficiently stimulated competition, and recommended measures to lessen the market power of the Big Four.
"The lack of an advocate for competition when financial system regulatory interventions are being determined is a mistake that should now be corrected," the commission said.