Aim for multi-tiered system, says Suncorp 02 December 2010 4:26PM David Walker Among other submissions provided to the Senate banking competition inquiry yesterday: * Bank of Queensland says government can most effectively reinvigorate bank competition by focusing on reducing funding costs, and re‐establishing a level playing field on funding. Government should double its current $16 billion investment in the residential mortgage-backed securities market, with the aim of driving down prices to AAA levels. Smaller banks could also be given the same Basel II 20 per cent risk weighting that the big four have.In the longer term the government should introduce a Canadian-style guarantee of lenders' mortgage insurance, lowering the cost of funds to second-tier mortgage lenders.* Suncorp Bank argues that lawmakers should aim for a "robust multi-tiered banking system"."The threat right now is that limited access to funding markets and securitisation will restrict the ability of regionals and non-banks to create necessary competitive tension," says CEO David Foster. There are plenty of participants in the market right now but at question is their ability to offer a sustainable competitive proposition."* Left-wing think-tank the Australia Institute says competition alone cannot address the banking industry's problems. Its submission calls for reducing banks' ability to unilaterally vary interest rate margins on products such as mortgages; capping some bank fees; mandating that all customers be offered no-frills accounts; and restricting the interest rate to be charged on unsecured loans. It also wants restrictions on sales targets and commissions for bank workers, surveillance of all fees and charges, and "a serious examination of the options" for structural separation of banks' deposit-taking and lending functions.And it wants excessive bank profits returned to the community "through such devices as a super profits tax on banking".* Payments challenger Tyro Payments has called for continued and intensified reforms to the payments system. The banking industry and the card issuer organisations must introduce self-regulated access, standards and rules, it says. "If they don't, government and regulators must drive industry initiatives and maintain competitive access." Tyro listed 12 reforms it says will allow better, less expensive and innovative Eftpsos solutions to come to market.* Property development industry body Urban Taskforce Australia says there is no longer a sufficiently deep or competitive market for commercial mortgages to property developers. That is creating a housing supply bottleneck, it claims. "The Federal Government needs to consider measures, such as a mandate for superannuation funds, to expand the range of institutions and pool of funds available."