Over-regulation strangling smaller bank competition: Bligh

afr.com:

Australian Banking Association chief executive Anna Bligh says over-regulation of the financial sector is strangling smaller lenders with compliance costs and making it tougher for them to compete with the big four banks.

There are 130 different regulatory changes in train over the next 12 to 18 months and Ms Bligh told the House economics committee on Thursday that the volume of change, by multiple regulators, is making it “impossible” for the sector to figure out what is actually important.

Anna Bligh says the proposed “regulatory initiatives grid” could be created in the Council of Financial Regulators. Peter Rae

“Smaller and mid-tier banks feel that the growing burden of just consulting on these things and making sure their voices are heard is a significant drag on their competitiveness,” Ms Bligh told the hearing on economic dynamism.

She suggested regulators be forced to get together and publicly set out their priorities in quarterly reports, based on a similar system in the UK.

This would help banks order where to invest to align with priorities, while helping to reduce duplication.

It comes just days after ANZ chief executive Shayne Elliott warned the rising regulatory burden was lowering risk tolerance of banks, limiting business innovation and making financial services the “preserve of the wealthy”.

“You run the risk of destroying aspiration in the economy,” he said in Brisbane on Tuesday. “At the moment, we’re on a path to zero – we have zero risk tolerance as a community.”

Ms Bligh said the proposed “regulatory initiatives grid” could be created in the Council of Financial Regulators, although this body does not include all regulators such as the Australian Competition and Consumer Commission. She suggested