Murray warns: 'watch out' for non-banks

Moderating a panel at the AFR Banking & Wealth Summit yesterday, industry commentator Christopher Joye posed the question: “Are we worried about the non-bank lenders and the resurgence of the Aussie, RAMS and Wizards of the world?”

Mr Murray said that resurgence of mortgage brokers isn’t the issue.

“I think we are talking about balance sheets; on whose balance sheets are these claims and obligations, whether it’s regulated in the banking system or outside it,” he said, adding that the non-bank sector needed "watching”.

“The intent of some of our [FSI] recommendations was to create a regulatory environment where it is watched,” he said.

Mr Murray gave the example of Woolworths as a large non-traditional, non-bank player with the potential to significantly disrupt the Australian lending landscape.

“They have positive working capital and they can start financing the supply chain all day without being a bank,” he said.

“It doesn’t take too much imagination to figure out how you get around this if the regulators get over the top. We have to watch out.”

Mr Joye said he believes the revival of non-bank lending “will be an issue over the next 10 years”.

Also on the panel was Suncorp CEO John Nesbitt, who said many institutions come very close to being a bank while avoiding the regulatory requirements needed to protect the interests of depositors.

“It gets back to who is actually lending the money and what the risk is,” Mr Nesbitt said.

Deloitte lead partner Kevin Nixon noted that asset managers have begun acquiring mortgage portfolios and acting as lenders.

This, he said, in addition to the emergence of market innovators, is creating a “big issue” that “does need to be addressed”.