The Big Four banks – Commonwealth Bank of Australia, Australia and New Zealand Banking Group, Westpac Banking Corp and National Australia Bank – currently control 80% of the home lending market and will face more scrutiny and regulation to correct the abuses of power following years of scandals, said Reuters.
The commission announced the reviews in a submission to the government’s chief economic advisory body, which was published on Tuesday. The reviews follow an ongoing judicial inquiry into Australia’s financial sector, which has already revealed that banks abused their power and routinely breached laws while issuing home loans, credit cards and other consumer loans.
In one of its first uses of the new powers, an interim inquiry in March on the mortgage pricing mechanisms of the banks and Macquarie Group found signs of “accommodative oligopoly behaviour”. The ACCC’s final report is due on June 30. The organisation is also expected to examine recent claims made by the Productivity Commission, the government’s chief economic advisor, that policy interventions by the banking regulator to curb asset bubbles had delivered record profits for the banks at the expense of competition, added Reuters.
In February, the Productivity Commission also recommended the ACCC should be a member of the Council of Financial Regulators, which is chaired by the central bank and holds the main responsibility of financial system oversight, to act as “the competition champion”.
Australia’s big four banks reported a combined net profit of US$24.5bn in the 2017 fiscal year, up 6.4% on a year ago, according to KPMG.