Treasurer Grant Robertson speaks after the release of the Semi-Annual Economic and Fiscal Update (HYEFU).
photograph: RNZ / Samuel Rilston
Treasurer Grant Robertson has announced that the Commerce Commission will investigate competition for personal banking services in the banking sector.
Robertson said there are long-standing concerns that the market is not working well for New Zealanders.
Its purpose was to ensure a competitive market among banks offering personal loans, mortgages, credit cards and other banking services.
“The bank has been consistently profitable over the years, and its earnings have outperformed its peers in other countries.
“New Zealand’s banking sector is dominated by a few large companies,” he said.
Big banks account for about 85% of the mortgage and other lending market and a 90% share of total bank deposits, according to Robertson, while lending by smaller financial institutions is on the rise. It is still small in comparison.
“There has been no detailed study of competition issues in New Zealand’s banking industry for some time, and New Zealand lags behind other countries such as Australia and the United Kingdom in detailed analysis of banking services.”
Commerce and Consumer Secretary Duncan Webb said this would be a first step in understanding the problem of bank competition.
“The Commerce Commission will focus on examining barriers to entry or expansion of new competitors into the market, the introduction of innovative products and services, and the ability of consumers to switch between banks.
“As part of the investigation, the European Commission will examine banks’ profitability and other financial indicators to assess competition in this area.
“The investigation will be completed by the end of August 2024 and will determine the necessary steps to ensure competition works for our banking customers.
The commission plans to release a preliminary issue paper in August, he said.
“Separately, work continued on establishing a regime for open banking and consumer data rights, with a draft bill due to be announced this week.
Robertson said the survey was not about bank behavior or culture.
“The Financial Markets Authority and the Reserve Bank conducted an investigation into the matter in 2018, which has already resulted in a number of steps being taken to protect consumers.”
To date, the Commission has conducted market research on competition and profits in the fuel market, reported on the supply of key homebuilding products, surveyed supermarkets across the country, and explored how competition among major retailers works well for New Zealanders. Found it not working.
