Speaking at yesterday's MyState Limited annual general meeting, the company's chairman Miles Hampton and its chief executive officer Melos Sulicich called on the government to address four factors which they say reduce effective competition and reinforce the dominance of the major banks.MyState chairman, Miles Hampton, said the government needed to address the impact of regulation on competition, the way the regulatory burden fell in a disproportionately large manner on smaller banks, funding cost advantages, and risk-weighted asset differentials which reduced competition in the market.Hampton recalled that the regional banks recently made a submission to the Productivity Commission's Competition Inquiry. He cited a section in the submission, arguing that the bank levy is a step in the right direction, as it partially addressed the cost of funds advantage enjoyed by the Big Four banks, given the implicit government guarantee of being too big to fail."The paper argues - and we agree - that more is needed," he said.The dual system of estimating risk weighted assets whereby the major banks use an APRA accredited approach called "internal ratings based", place them at a considerable advantage over the other banks that use an APRA prescribed "standardised" approach. "The gap between the approaches must be reduced, particularly in respect of lowest risk loans," he told shareholders.Hampton said the paper made other recommendations in respect of the transparency of broker ownership and loan direction, and that before any new regulations are introduced, greater consideration should be given to the impact on smaller banks."MyState fully endorse the recommendations as a way of ensuring a more level playing field that will deliver enhanced competition to the benefit of our customers and the whole Australian community," Hampton said. Sulicich added that APRA's 'speed limit', restricting all banks' investor lending to 10 per cent annual growth and interest-only lending to 30 per cent of flows, had disproportionately constrained smaller banks' ability to grow. "The larger banks' investor loans are typically 35 to 45 per cent of their mortgage portfolios, while smaller banks' investor loans are around 20 to 25 per cent of their loan portfolio. Instead of creating competition, this regulation has handed larger banks an advantage as rates on investor and interest-only loans increased," he said.