Mr McFarlane does not believe regulation is needed in Australia, saying competition will bring the fees down.(via ABC Online)
Aaaah, yes indeed. Competition. The cure-all for the ills of a free market economy. We’ve no need to be concerned over a regime of exorbitant bank fees, because competition will ensure that such fees are kept low. Yeah? Bullshit in a bottle!!
If competition is keeping bank fees low, why is Choice calling for industry wide action to stop them from constantly rising? I’m not at all surprised the John McFarlane believes in the ebb and flow of a market economy driven by competition. He’s a career banker who’s always operated in the upper echelons of banking and finance. He’s no more in touch with the way competition keeps bank fees low than I’m in touch with the mechanics of a scram jet engine.
Banking and finance in Australia has no regulation, other than the capital constraints placed upon the major financiers by the RBA. All banks and finance houses are free to rape and pillage among the consumers to their hearts content. A little regulation on the issue of certain fees and charges would be a good thing. It might just force the banks to re-think a range of other money-making sidelines as a means of recouping what they’ll surely feel cheated out of. Heavens forbid, it might mean they’ll have to get back into providing services in order that they apply a user pays modicum, whereas currently they simply charge for the sake of charging. No service ethic applies. No-body minds paying for something if they know they’re actually getting something in return, like service.
Competition with Australian banking and finance doesn’t exist because all the players face off constantly, daring each other to blink. If no-one blinks, nothing changes and for the past ten to fifteen years, no-one has blinked. Innovation is not a watch-word for the banking industry. To be innovative means you’re taking a risk and bankers don’t take risks. Not when there’s potential to screw up and allow a competitor get the march on you. There’s a maxim in banking. Don’t agree to do anything and you can’t be held to account for something you haven’t done.