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The former chairperson of the ACCC has lashed out against the “ineffectiveness” of ASIC as a financial watchdog, amid reports of misconduct and a lack of competition in the banking sector.
“This issue about ASIC ineffectiveness has been going for twenty five years and it's got no better over time, and the latest revelations just confirm that we have to do something more fundamental,” said former ACCC chair Allan Fels in an interview with ABC senior business correspondent Peter Ryan.
It isn’t the first time Fels has made his feelings known, with similar comments on the public record several times in recent months. In April he called royal commission findings “widespread, shocking, unconscionable” and worse than he expected. He has also called for the forced separation of banking and financial planning activities.
His fresh comments echo those made by the Greens on 9 August.
The Productivity Commission report released last week highlighted “opaque practices” in the banking industry that harm consumers. For example, it said the standard variable home loan interest rate advertised by ADIs bears no resemblance to the actual interest rates offered to potential borrowers, as the vast majority of consumers pay less than this rate.
The interest rate offered to a borrower is only revealed once they are well into the application process, it added. Home loan packages that bundle home loans with other financial and credit products, such as offset accounts and credit cards, further obscure the actual value and comparability of individual components.
In the ABC interview aired on 9 August, Fels claimed that ASIC is “not feared” by banks as a corporate enforcer, unlike the ACCC. “It [ASIC] has a culture – it's had a long running culture of not vigorous, without fear or favour law enforcement.” On the recent ASIC move to embed its staff in banks for greater oversight, Fels believes such wouldn’t work. He said the government should dig deeper, amid “deep conflicts of interests” in such financial institutions.
ASIC declined to comment.
