Reflecting on the five years since the Hayne Royal Commission, Mr McEwan said recent years have seen a regulatory “complexity that ultimately impacts customers”.
Addressing the Trans-Tasman Business Circle in Sydney on Thursday, Mr McEwan said he was concerned a growing number of Australians were increasingly outside the financial system.
“There is a part of the population that I think is now not seen much in banking because of some of the regulation that has come through, rightly or wrongly,” he said.
Home ownership concerns
Mr McEwan, who’s due to step down from his role on 1 April, said he was concerned about home ownership which is increasingly beyond the reach of many Australians.
“Our research finds that home ownership is clearly linked with higher wellbeing,” he said.
“That’s one of the reasons I’m concerned about the housing supply crisis.
“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.”
Affordability crisis
PropTrack’s most recent Housing Affordability Report showed affordability had fallen to its lowest level in more than 30 years, with the cost of servicing a mortgage at near record levels.
Roy Morgan data found more than 1.52 million Australians were at risk of mortgage stress in December, a fall from the 1.57 million at-risk mortgage holders in September.
Australia’s responsible lending obligations and other codes of practice are designed to protect consumers from taking on loans beyond their financial means.
Web of financial regulation
Mr McEwan listed the banking rules and regulations introduced or tightened over recent years.
These included responsible lending guidelines, the introduction of comprehensive credit reporting and “the intersection of that with hardship”, the banking code of practice, and the consumer right to their data.
“They each have a role to play but collectively they have created a complexity,” Mr McEwan said.
In his role as chair of the Australian Banking Association, he said it is very clear how challenging the impact of regulation can be on small and medium-sized banks, and in turn their customers.
“The simplification and connectivity of these various rules and regulations is important to consider,” he said.
“Competition in banking will further flourish when this incredible complexity disappears.”
He conceded unnecessary complexity is not limited to the banking sector but urged governments and regulators to look to reduce red tape at every opportunity for customers and businesses.
Are banks too harsh?
Mr McEwan said banks must also consider if they had become too tough in applying responsible lending regulations, singling out treatment of 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.”
Upbeat on Australian economy
Mr McEwan also spoke positively about the Australian economy, noting it was slowing but would avoid 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.”
He also believed the federal government’s changes to the Stage 3 tax cuts would also help support the economy.
Mr McEwan has been NAB CEO since July 2019. He hands over the role to the bank’s current Executive Business and Private Banking boss Andrew Irvine on 2 April.
Image by Masaaki Komori on Unsplash
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