SYDNEY, Feb 7 (Reuters) - Australia’s financial regulator has failed to stimulate competition in the country’s finance sector, creating an environment that promotes record profits over the interests of customers, the government’s chief economic advisory body said.
The Australian Prudential Regulation Authority (APRA) has created a stable financial sector, but has done so at the expense of competition, the Productivity Commission said on Wednesday.
“APRA’s interventions in the market ... have been excessively blunt and have either ignored or harmed competition,” the Commission said in an interim report on the country’s financial sector.
Australia’s big banks - Commonwealth Bank, National Australia Bank Ltd, Australia and New Zealand Banking Group and Westpac Banking Corp - reported a combined net profit of A$31.5 billion ($24.9 billion) in the 2017 fiscal year, up 6.4 percent on a year ago, according to KPMG.
However, they have come under fire over allegations of misleading financial advice, insurance fraud and interest-rate rigging, while the Commonwealth faces further accusations of tens of thousands of breaches of anti-money laundering rules.
The conduct of the so-called “Big Four” banks will be examined in a wide ranging, year-long enquiry Royal Commission that is due to begin next week.
“Much of what passes for competition is more accurately described as persistent marketing and brand activity designed to promote a blizzard of barely differentiated products and ‘white labels’,” the Productivity Commission report said.
An APRA spokesman said the regulator welcomed the draft report.
“We have actively engaged with the Commission in the preparation of the draft report and we will continue to do so as it prepares its final report,” the spokeman added.
$1 = 1.2674 Australian dollars Reporting by Colin Packham and Byron Kaye; editing by Richard Pullin