Regulation complexity is hurting bank customers, says NAB’s departing chief

Departing NAB boss Ross McEwan says rules brought in to police the banking sector have put access to finance out of reach of many.

NAB chief Ross McEwan chats with federal Treasurer Jim Chalmers during the Trans Tasman Business Circle. Picture: Britta Campion

Five years on from the banking royal commission, the boss of Australia’s biggest business lender has warned the growing web of financial regulations has put finance increasingly beyond the reach of many customers.

National Australia Bank CEO Ross McEwan said he was concerned rules and regulations introduced in recent years had created a “complexity that ultimately impacts customers”.

Mr McEwan, speaking at the Trans Tasman Business Circle on Thursday, said a growing number of Australians were increasingly outside the financial system.

“There is a part of the population that I think that is now not seen much in banking because of some of the regulation that has come through, rightly or wrongly,” he said. Mr McEwan, who is will leave the bank April 1 exit, said he was conscious of the regulatory burden on both Australians and smaller lenders.

“Rules introduced or changed for responsible lending, the introduction of comprehensive credit reporting, and the intersection of that with hardship, the banking code of practice, the consumer data right – these have all been important initiatives individually,” he said. “They each have a role to play, but collectively they have created a complexity that ultimately impacts customers.”

Mr McEwan, who also chairs the Australian Banking Association, said it was important to consider the simplification of various rules and regulations.

“Competition in banking will further flourish when this incredible complexity disappears. Unnecessary complexity is not limited to banking,” he said.

“Governments and regulators must look to reduce red tape and complexity at every opportunity for consumers and businesses.”  Regulators have warned ANZ’s $4.9bn acquisition of Suncorp Bank could diminish competition in the Australian banking sector.

But Mr McEwan said he wasn’t concerned about ANZ’s bid, noting Australia had to be careful it didn’t lock capital in unwanted ­assets.

Mr McEwan said banks had to consider if they had become too tough in applying regulations around responsible lending, particularly with older Australians. “Ask someone who is probably somewhat older than me if they can get a credit card and how difficult is that,” he said.

“If you want to go on a cruise, unfortunately you need a credit card, you can’t use a debit card.

“We know they’re good to pay it back, but we’re told it’s too hard to apply that into the system.”

Mr McEwan said he was also concerned about home ownership, which was increasingly beyond the reach of many Australians.

“Our research finds that home ownership is clearly linked with higher wellbeing. That’s one of the reasons why I’m concerned about the housing supply crisis,” he said.

“The Great Australian Dream continues to feel out of reach for so many. Banks, working with government, councils and developers, have a big role to play here.”

Repayments have skyrocketed for many after the Reserve Bank ratcheted up the cash rate from 0.1 per cent to 4.35 per cent.

Mr McEwan said he was confident about the Australian economy, noting it was slowing but the country would avoid a recession.

“Inflation is easing and it appears interest rates have peaked. We still have low unemployment, strong demand for natural resources, a growing education export market and high migration levels,” he said. “All of these bode well for the Australian economy, but it is fragile.”

The NAB chief said the government’s move to tweak the Stage 3 tax cuts would support the economy.

“We still have a long way to go over the next 12 months to see how it all plays out,” he said.

Treasurer Jim Chalmers, also speaking on Thursday, said the government was confident about Australia’s economic outlook, taking reassurance from the latest inflation and real wages figures.