The federal government will launch an inquiry into the competitiveness of the financial system in July with the intention to improve outcomes for consumers.
Treasurer Scott Morrison says the Productivity Commission has been tasked with holding the inquiry which will commence on 1 July 2017 and is due to report to the government by 1 July 2018.
The Productivity Commission will look at how to improve consumer outcomes, the productivity and international competitiveness of the financial system and economy more broadly, and support financial system innovation, while balancing financial stability objectives, Mr Morrison said in a statement.
The inquiry will consider the level of contestability and concentration in key segments of the financial system, including the degree of vertical and horizontal integration.
It will also examine competition in the provision of personal deposit accounts and mortgages, and services and finance to small and medium businesses.
In a responding statement released today, the Australian Bankers Association (ABA) welcomed the inquiry.
“We welcome the Productivity Commission inquiry, which will provide us with a thorough, robust and credible assessment of competition in the financial system,” ABA chief executive Anna Bligh said.
“It adds to the 15 government or regulatory inquiries under way to make banking better for customers,” Ms Bligh said.
According to the ABA, 144 authorised deposit-taking institutions operate in Australia, over half of which are banks, including retail, investment and mutual banks. The other half are predominantly credit unions and building societies.
Canstar data shows there are 91 institutions offering almost 3,500 housing loans, 1,300 deposit accounts, 196 credit cards and 185 business lending options, the ABA said.
“The banking industry pledges its full support and assistance to the Productivity Commission review,” Ms Bligh said.