Senior bankers have expressed their concern to the Federal Government about what they see as an increasingly uneven playing field in the market for household savings.Banks have had to adjust to a steady shift in the destination of savings from bank products to superannuation over the past decade but they believe the most recent change to taxation arrangements affecting super, the ability of retirees to take tax-free benefits after age 60, has tipped the balance too far.Australian Prudential Regulation Authority chairman John Laker said yesterday there were concerns in the banking industry about a lack of competitive neutrality. Laker, who was speaking at an industry lunch in Sydney organised by the Investment and Financial Services Association and Deloitte, said: "We may see some competitive impact of that working itself out.""From a prudential point of view we have to look at how banks manage a situation where the growth in deposits does not match the growth in their assets. Our interest is in how they manage their liquidity."Laker said one outcome of this adjustment, where banks sourced more of their funds from the capital market, was that the household sector was more exposed to financial risk."That is a challenge for the industry. That is not an APRA issue. The question of how households manage their risk is about how well informed they are."Issues of financial literacy, and understanding the risks of investing in such instruments as debentures, are outside the prudential sphere. "However, there are more extensive disclosure rules in Basel II."Laker said the system was sound. In the years since financial deregulation started in the early 1980s financial system assets have grown from 130 per cent of GDP to 350 per cent today.He said: "This growth is not froth and bubble. It is a process of financial deepening. As incomes of households and businesses grow their demand for financial products grows. The industry has met that demand."Also yesterday, APRA and the Australian Securities and Investments Commission issued a discussion paper on a proposed online breach reporting system for the 600 institutions that are regulated by both bodies.The proposed system is designed to simplify reporting procedures and cut out duplication. The proposal follows the recent passage of the Financial Sector Legislation Amendment (Simplifying Regulation and Review) Act 2007, which introduced a consistent definition of reportable breaches across all institutions in APRA-regulated industries and ASIC licensees.