The Government has requested the Productivity Commission to hold an inquiry into competition in Australia’s financial system.

The Terms of Reference require the Productivity Commission to look at how to improve consumer outcomes, the productivity and international competitiveness of the financial system and economy more broadly, and support ongoing financial system innovation, while balancing financial stability objectives.

In particular the Inquiry will:
1.consider the level of contestability and concentration in key segments of the financial system (including the degree of vertical and horizontal integration, and the related business models of major firms), and its implications for competition and consumer outcomes;
2.examine the degree and nature of competition in the provision of personal deposit accounts and mortgages for households and of credit and financial services for small and medium sized enterprises;
3.compare the competitiveness and productivity of Australia’s financial system, and consequent consumer outcomes, with that of comparable countries;
4.examine barriers to and enablers of innovation and competition in the system, including policy and regulation;
5.prioritise any potential policy changes with reference to existing pro-competition policies to which the Government is already committed or considering in light of other inquiries.

The Inquiry will commence on 1 July 2017 and is due to report to the Government by 1 July 2018.