Deloitte: Australian Government Needs to Protect Smaller Banks

By Kalen Smith, Big4 Blogger

A new report from Deloitte claims that larger banks have a oligopoly over their smaller competitors. Deloitte representatives said the government needs to conduct an assessment of the financial industry. They said that the government will need to take the necessary steps to ensure smaller banks will have a fair chance of competing against their larger competitors.

The government instituted a number of policies to encourage stability in the financial industry in the aftermath of the global financial crisis. However, the report said that many of these regulations have given an unfair competitive advantage to the larger banks. Larger financial institutions were responsible for many of the problems that led to the collapse of the financial industry in the first place.

Credit unions and local financial lenders are struggling to grow. Deloitte also said that the regulations the government has setup could be double-edged sword for the financial industry. They were setup with the intention of protecting the “too big too fail” banks. However, the government may inadvertently be encouraging larger financial institutions to start engaging in risky trades again, possibly setting the road for another financial crisis.

In order to prevent the possibility of another financial collapse, Deloitte said that the Australian government needs to promote competition rather than protecting the largest financial institutions.