Virgin Money’s launch of new credit cards and an online savings account is good news for consumers who have been victims of gouging by the four major banks.
Australia has one of the most concentrated banking sectors in the world and that’s costing Aussie families dearly. The dominance of the four major banks means that they have been able to push up interest rates and fees at will to the detriment of consumers.
The failure of both the Federal Treasurer Wayne Swan and the ACCC to stop the major banks from taking over St George and BankWest was a big mistake and has allowed the four major banks to take a stranglehold over the banking sector. This mistake was made worse by the Treasurer’s and ACCC’s failure to stop the major banks from cleaning up or taking strategic interests in the non bank mortgage specialists such as RAMS, Aussie Home Loans and Wizard. These non-bank mortgage specialists were instrumental in driving competition and strong putting downward pressure on mortgage rates. By seeking to neutralise these players the four major banks have been able to cement their dominance of the Australian banking sector.
With the four major banks now acting as a cosy club where they shadow one another on interest rates, it’s clear that new competitors are urgently needed to help drive down mortgage and credit card rates. Given the ongoing failure of the Federal Government’s “bank switching” package it’s also essential that we have effective competition laws. With Australia having some of the weakest competition laws it’s time to update our competition law framework to help drive competitive outcomes for benefit of consumers and small businesses.
Virgin Money’s new credit cards and online savings account represent a vital step forward in ensuring effective competition in financial sector. We particularly look forward to Virgin Money offering mortgage products as that’s where consumers need to see real competition. This is a unique opportunity for the very strong brand recognition enjoyed by Virgin in Australia to be leveraged into a much needed strong new competitive force in the financial sector.
