A Parliamentary Select Committee Inquiry should be conducted into retail banking regulation and competition, National’s Finance spokesperson Nicola Willis says.

“I have today written to members of the Finance and Expenditure Select Committee asking that we open a short, sharp inquiry into any potential competition issues in New Zealand’s retail banking sector.

“New Zealanders enduring a prolonged cost of living crisis will have been concerned to hear the Reserve Bank join a chorus of voices casting doubt on the competitiveness of the retail banking market.

“Last week the chief economist of the Reserve Bank, Paul Conway, said he thought a Commerce Commission market study into the retail banking sector could be warranted.

“This comes at a time when bank profitability is high, even as access to credit has become harder to obtain for some borrowers and many mortgage holders are feeling crushed by rapidly rising interest rates.

“National believes New Zealand bank customers deserve answers to questions about the adequacy of competition in our retail banking sector, why increases in interest rate rises for deposits have lagged rate rises for lending, and the impact of new regulations imposed by the Government.

“I propose that the terms of reference for the Select Committee inquiry should be narrow in scope and the hearing of evidence should be limited to a narrow group of stakeholders.

“After considering this evidence the Select Committee could then make recommendations to Government about any next steps that may be warranted, including whether it sees merit in progressing the Reserve Bank's suggestion of launching a market study.

“A formal Commerce Commission market study would take a long time and be extremely resource-intensive, creating a lucrative opportunity for lawyers and consultants, but highly unlikely to give New Zealanders any immediate answers to what are urgent questions.

“I hope FEC Members across political parties will join me to take on the task of getting New Zealanders timely answers to questions about retail banking competition. An open, publicly accountable Select Committee Inquiry would be a pragmatic step forward.”

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