Political pressure is mounting on the federal government to address APRA's negative impact on competition in the banking sector, with influential cross-bench senator Nick Xenophon promising to introduce legislation next year that would reconfigure the way the prudential regulator operates.In a speech to the Community Bank National Conference in Adelaide on Tuesday, Xenophon said he wanted to change APRA's statutory mandate so that it would take account of competition issues when developing prudential measures.MPs from across the political spectrum are also growing impatient with the prudential regulator's "work behind the scenes" to neutralise the funding advantage that the major banks derive from perceptions they are "too big to fail".Treasurer Scott Morrison estimated in May that the implicit government guarantee delivered a funding cost advantage of up to 40 basis points to the four majors and Macquarie.If APRA fails to introduce a capital surcharge to neutralise the anti-competitive effects of this funding benefit, the government might be tempted to increase the rate on the recently introduced major banks levy.In its submission to the Productivity Commission inquiry, Commonwealth Bank rejected suggestions that an implicit guarantee existed."Commonwealth bank does not believe that there is, nor should there be, an 'implicit guarantee' for Australia's major banks," the bank said in its submission."General government support for the whole banking industry is important, and is critical in periods of stress."If the government is to address the effects of a perceived 'implicit guarantee' for Australia's major banks, the best tool for minimising the impact would be to increase the resilience of the financial system, as recommended by the FSI."Elsewhere in its submission CBA urged that bank supervisors and policy makers address the unevenness of regulation across the financial sector."The rise of the shadow banking sector, an outcome of non-uniform regulation in the financial system, puts the stability of the system and protection of customers at risk," the bank said."Commonwealth Bank recommends that legislation and regulatory policy be updated to ensure they apply to all competitors participating in the financial system."