April Newsletter: Good start by the Commerce Commission and an opportunity to contribute
Welcome to the April 2024 newsletter. Here is a link to previous newsletters.
Commerce Commission draft report on banking competition
The Commerce Commission has released its draft report on banking competition. While it did not address the windfall profits made by the Australian banks directly, there were a handful of recommendations consistent with our position, that was good to see:
They called our current system a "stable two-tier oligopoly" with the top tier (ANZ, ASB, BNZ and Westpac) enjoying sustained high levels of profitability compared with their global peers. Smaller providers are in the second tier, and Kiwibank was "stuck in the middle".
They mentioned the opportunity for Kiwibank and open banking to play a central role in challenging the oligopoly. The report suggested that if the capital position of smaller providers and Kiwibank were improved they could be a possible disrupter to the power enjoyed by the Australian banks.
They suggested putting some (polite) heat on Reserve Bank to put competition up front in its regulatory decisions.
They cited UK regulatory developments favourably (open banking and switching banks) but didn't mention one of them which we believe is central to reform- splitting off the retail sides of the big banks.
Following is a link to the Executive Summary of the draft report along with the Commission’s press release. We will be putting in a submission supporting the above recommendations and suggesting a few more.
We have a discussion document on our website called Reimagining Banking which gives an alternative banking future for New Zealand, and how we get there. Take a look at it and send me feedback and your thoughts.
Debt-to-income ratios (DTIs).
We put in a submission on the Reserve Bank’s plans to introduce debt-to-income ratios (DTIs) by mid-year. Debt-to-income ratios aim to restrict residential mortgage credit so that repayments stay within a multiple of the borrower’s income, a key measure of affordability.
We strongly support this long-overdue policy to restrain excessive bank credit in the housing market but raised several concerns about its proposed implementation.
An opportunity to contribute
We are looking for people to join our team and help bring about real change to money and banking in New Zealand. If that is something you would like to do, note that you do not have to understand economics to join the team, but here is what it will entail:
Understand our Manifesto which spells out what we stand for and our goal.
Participate in weekly Zoom calls. The calls last for approximately 30 minutes and are an opportunity to share experiences and have any questions answered.
Take an average two actions per week to advance the PMNZ campaign. This can include contributing to email conversations during the week, forwarding items of interest to the team, letters to the Editor, articles for newspapers, assisting with submissions, handing out fliers, having conversations etc.
Be respectful of others. Treat others, who have an opinion different from yours, as you would like to be treated.
Do not engage in conversations about the Rothschilds, the international Jewish conspiracy, the New World Order etc.
Lead a balanced life. Ensure that you devote enough time to other aspects of your life.
If that sounds like you, please contact me at info@positivemoney.org.nz to join our team.
Nga mihi
Don Richards