GFC made Australian banks too big to fail
The global financial crisis (GFC) has left Australia's major banks too big to fail, according to a new report released today by Deloitte Access Economics.
And according to Abacus Australian Mutuals, the development has provided a first-rank reason for the Government to commission an independent inquiry into the Australian financial system.
At the same time as some sectors of the financial planning industry are lamenting the growing influence of the banks via the Future of Financial Advice (FOFA) changes and consequent vertical integration, the Deloitte Access Economics report has pointed to the deficits inherent in the so-called "bank guarantee" implemented during the GFC.
The report, commissioned by Abacus, said the move had handed the banks an unfair competitive advantage and weakened the competitiveness of the Australian banking system, leaving consumers worse off.
Commenting on the report findings, Abacus chief executive Louise Petschler said Australia had not reviewed its financial system since the Wallis inquiry of 1997, and the findings of the Deloitte Access Economics research made it clear it was now time to have an in-depth inquiry to improve competition.
"Deloitte Access Economics has shown that cheaper funding costs for major banks and more regulatory burden on smaller players has led to less competition," she said. "Without sensible review and action, this will lead to less choice and worse outcomes for Australian consumers."
Petschler said an extensive and independent inquiry would be a positive step to improve banking competition and better protect the financial system.
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