Consumer NZ backs calls for banking competition inquiry

Consumer NZ is backing calls for a Commerce Commission inquiry into bank profits and competition.

The organisation's chief executive Jon Duffy told Breakfast a Commerce Commission inquiry "is far preferable" to a "short and sharp" select committee one.

"I think another way of describing short and sharp would be quick and dirty.

All parties in Parliament want a select committee inquiry — except Labour, which believes it would be "premature".

The four big banks — BNZ, ASB, ANZ and Westpac — declared combined after-tax profits of an eye-watering $6 billion in the last financial year.

They're all Australian owned, yet they control 85% of the lending in New Zealand.

"This is a big issue, these are the four most profitable companies in New Zealand, they're an essential part of our financial system, to do something that wasn't robust and a deep analysis of their profitability and why they're able to extract such high profits from New Zealanders, I think would be a missed opportunity."

Duffy likened the situation to the supermarket crisis, where all the signs pointed to "something being broken in the market".

He said factors like high profitability and low innovation suggest limited choice for consumers, and the incumbent top four banks are in a really "comfortable position where they can keep ratcheting out the profits".

Duffy told Breakfast he, like many other Kiwis, has questioned the level of service he's getting and what value he's getting from his bank.

He said research indicates Kiwis are questioning the level of profits banks are making and the value and return that they're getting for the fees and interest rates they're paying.

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"What we're picking up is a general dissatisfaction with the value that consumers are perceiving they're getting back for what they're paying to banks.

"I think the real question here is, at what point do you say well businesses need to be profitable, they need to turn a profit, what is a reasonable profit for a business that size and when does that profit become excessive which would indicate there's something funky going on in the market that needs to be rectified?"