Speaking at the ASIC Annual Forum in Sydney yesterday, ASIC chairman Greg Medcraft repeated his claim that the Australian banking sector is "clearly an oligopoly", adding that "now is the time to deal with it".
Treasury is currently considering the design of new product intervention powers for ASIC following a round of consultation with industry that ended on 15 March 2017.
The product intervention powers stem from a recommendation of the Financial System Inquiry that has been accepted by the Coalition government.
Despite objections from the industry that such powers could stifle innovation, Mr Medcraft advocated them yesterday as an important tool to improve competition with financial services.
"One of the issues about general insurance and life insurance has been about remuneration and commissions structures," he said.
"We need to be able to intervene to make rules about remuneration structures," Mr Medcraft said.
The new product intervention powers, if properly structured, could be particularly effective when combined with the proposed Australian Competition and Consumer Commission (ACCC) ongoing inquiry into banking competition, he said.
The House of Representatives standing committee on economics recommended in November that the ACCC establish a team to make recommendations to the Treasurer every six months to improve competition in banking.
"I think you can do a lot in terms for dealing with conflicts of interest [in the banking sector] with the remuneration structure – the incentives to sell," Mr Medraft said.
"If you deal with that, the banks may challenge why they need to be in every market. They're getting out of wealth management. If you can't essentially force someone to sell your product then you might as well not [be in the market]."
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