Non-bank heavyweight backs bank reforms
Mark Bouris has come to the defence of the federal government’s recent banking reforms.
In the past few days since Treasurer Wayne Swan released the banking reforms, industry heavyweights have voiced their dissatisfaction towards the overall competition package and suggesting that the government did not consult with non-bank lenders before drafting the reforms.
However, this suggestion has since been shot down by Mr Bouris, executive chairman of Yellow Brick Road.
Speaking at the senate inquiry into banking competition, Mr Bouris said there are continual and ongoing discussions between the government and Yellow Brick Road as a representative of the non-banking sector regarding financial reforms.
“It has been stated that mutuals and credit unions are ‘not up to the job’, do not have the strength to comprise a fifth pillar and are just ‘corner stores’. I want to make it abundantly clear that small corner stores do work when there are enough of them. We’ve done it before and we were the first to establish a proven and successful business model, which provided the consumer with a cheaper and more accessible home loan option,” he said.
“We were criticised in the 1990’s for this disruptive business model in the lending market and those same challenges have resurfaced. Any suggestions otherwise are not only fodder for a personal agenda, but a direct challenge to our business model. The incapability of mutuals is simply inaccurate.”
Mr Bouris also took the time to weigh into the heated debate surrounding exit fees.
“Yellow Brick Road believes that removing exit fees on standard variable rate loans is both proper and appropriate to prevent consumers being locked into high rate loans, and the company fully supports the Treasurer’s proposals in this area,” he said.
According to Mr Bouris, this measure will benefit consumers and increase the level of competition in the market.
However for clarity, Mr Bouris said it was important that recovery of costs for discounted loans should not be confused with exit fees.
“A discounted loan is one with a significant reduction in interest rate compared with the standard variable rate, which naturally may lead to additional direct costs for the lender,” he said.