Big four banks throw their weight around
The global recession generated by the sub-prime crisis has served to reinforce the dominance of Australia’s major banks across almost all segments of the nation’s financial services industry, yet the Australian Competition and Consumer Commission (ACCC) appears relatively unconcerned.
After nearly two decades during which the banks saw their dominance of the mortgage origination market pared back by the rise and rise of the secondary lenders, all that changed with the tightening in liquidity following the collapse of Lehman Brothers and then the imposition of the Government’s bank deposit guarantee.
Today, Australia’s big four banks probably boast as much dominance of the mortgage market as they did 20 years’ ago. The secondary lending market, while recovering, is a pale shadow of its former self.
The creep of big bank dominance in the financial planning and wealth management sector has been far less immediate and obvious, yet in the past nine months the numbers of financial planners who have found themselves working under the umbrella of a major bank has increased exponentially.
While Westpac has grown its footprint via its acquisition of St George, and the Commonwealth Bank has grown its presence via Bankwest, it has been National Australia Bank that has proved most aggressive in the wealth management space, having acquired Aviva Australia and now attempting to acquire AXA Asia Pacific.
According to some, the acquisition of AXA Asia Pacific will give NAB and its wealth management arm, MLC, 15 per cent of the financial planning market, still behind Westpac and AMP but nonetheless a very significant presence.
Taken on its own, the acquisition of AXA Asia Pacific will probably not represent a significant blip on the radar of the ACCC, but taken together with the other changes that have occurred in the financial planning and wealth management industry, the regulator would do well to take a good, hard look.
It is not the dominance of any single bank that should be worrying the ACCC, but the growing dominance of the banks as a whole. Simply put, the big banks that are significant product manufacturers have gained even greater control of the retail distribution channel.
AUTHOR
Mike Taylor
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