Australia's five biggest banks have been slugged with a new, multi-billion- dollar levy and a suite of stepped-up controls and penalties imposed by the federal government in the name of fairness and accountability.
The big four banks of Westpac, ANZ, Commonwealth Bank and National Australia Bank, plus Macquarie Group, will be hit with a new levy that will reap $6.2 billion in revenue for the government over the next four years.
Treasurer Scott Morrison, unveiling the measures in the federal budget on Tuesday night, said the new levy is part of a broader package aimed at improving accountability and competition in the banking sector.
Banks with liabilities of more than $100 billion - which is currently the big four lenders and Macquarie - will be slugged a levy of 0.06 per cent on those liabilities each year from July 1, delivering revenue of $6.2 billion over the next four years.
"This represents an additional and fair contribution from our major banks, is similar to measures imposed in other advanced countries, and will even up the playing field for smaller banks," Mr Morrison said.
The revenue will be directed towards budget repair, the treasurer said.
Everyday customer deposits are not included in the liabilities, and the levy will not apply to superannuation funds or insurers.
The government is also boosting funding for financial industry watchdogs by more than $50 million over the coming four years as it gives them extra powers and introduces a new system for customer complaints.
That funding will come from further imposts on the banks in the form of increases in the current Australian Prudential Regulation Authority (APRA) financial institutions supervisory levies.
The reforms follow a string of financial misconduct scandals in recent years, and calls from the federal opposition for a royal commission into the financial industry - a measure the Turnbull government has resisted.
The Australian Prudential Regulation Authority (APRA) will be able to remove and disqualify executives that hide misconduct, and ensure at least 40 per cent each executive's pay is linked to more than short-term performance.
APRA will also have a closer eye on the industry, with all executives required to register with the watchdog and outline their role and responsibilities.
Fines for misconduct will rise to a maximum $200 million for the largest banks, and companies could be penalised for failing to properly monitor the actions of senior management.
The government is also establishing a one-stop shop for customer complaints from July 1, 2018, called the Australian Financial Complaints Authority, which the government says will avoid the confusion and duplication of the current complaints systems.
Credit cards will targeted as well, with lenders required to assess a customer's ability to repay their debt, and interest calculations to be simplified.
The federal government said it plans to open up the banking industry to new players by increasing access to products and customer data, if consumers consent, with a review into the best approach for those measures to be concluded by the end of 2017.
