News

Through a new report the Australian Institute claims there is no doubt that the major banks are exploiting their market power to gouge excessive profits from their customers.

According to the institute the Big Four have been profiteering by lifting rates above the RBA's official moves, reported The Adviser.

While they  claim their costs are rising by more than the official rate moves the report has found otherwise.

"Banking in Australia is essentially a rogue market in which a small number of winners take all. There is a clear case for government to take action with a combination of regulation, structural reform and improving competition," senior research fellow at the Institute David Richardson said.

As expected, the Australian Bankers' Association has dismissed the report.

And in other news, rival news-hub Brokernews is reporting today that government's bid to boost competition through greater regulation could actually hinder it after all is said and done.

According to KPMG the tougher regulations, particularly around exit fees, could threaten credit unions' and building societies' revenue and profitability.

"As we see more and more regulation in the name of increasing competition, we're going to see the non interest income to average total assets of these organizations come down," KPMG banking partner Martin McGrath told the Sydney Morning Herald.

Mutuals charge at least twice as much as major banks in exit fees - upwards of $2,000, compared to the big banks' average of $700.

Mutuals industry body, Abacus, has welcomed KPMG's report.

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