The role played by regulators in institutionalising the market power of major banks is a recurring theme of the latest published submissions to the Productivity Commission's inquiry into financial services.Anti-competitive outcomes stemming from decisions of the Australian Prudential Regulation Authority are the main focus of a feisty submission lodged yesterday by the Customer Owned Banking Association.COBA is backing the inquiry's draft recommendations that would reshape APRA's mandate to ensure its prudential settings take into account the impact of competition."Policymakers should make a concerted effort on multiple fronts to promote competition in banking," COBA states in its submission."The state of the market, as described in the Productivity Commission draft report and the ACCC's mortgage pricing report, demands a committed, systematic response to reducing barriers that hamper the banking sector's 'long tail' of smaller providers."Action to create a more level playing field, with due care to retain strong prudential and consumer protection frameworks, will empower second-tier lenders to challenge the major banks and their cosy oligopoly."While acknowledging that APRA's recent discussion papers on reform of regulatory capital standards demonstrated a "consideration of level playing field in policy options", COBA is agitating for the regulator's mandate to include an explicit competition objective.COBA also supports the inquiry's proposal to have a competition champion represented on the Council of Financial Regulators."We agree that the lack of an advocate for competition is a mistake that should be corrected," COBA states in its submission."APRA's excessively blunt macro-prudential intervention into the home loan market has harmed competition and unfairly affected smaller banking institutions."Another regulator - the Reserve Bank's Payments System Board - cops a ferocious critique from Melbourne-based payments consultancy, McLean Roche.The consultancy's chief executive, Grant Halverson, pans the PSB's reform record and questions whether its directors are equipped to oversee the development of the Australian payments market."The independent board members are all well respected business leaders; however a review of their CVs shows none of them have payments industry experience nor do they have the benefit of consulting with an advisory board," McLean Roche observes in its submission."This is an untenable situation for independent directors and should be reviewed - payments are a specialised industry and given the strategic importance some board members should have industry experience…"McLean Roche argues that the PSB, the Reserve Bank and the ACCC each failed to protect consumers from the fallout of the credit card interchange reform process in 2002.One of the big disappointments of the lowering of credit card interchange rates was that merchants were never forced to pass on savings to consumers.McLean Roche maintains that banks and credit card schemes retrieved the lost interchange revenue by hiking fees levied on credit and debit cardholders.Historical number crunching by the firm unearthed the following findings:•    average annual credit card fees rose from A$24 in 2002 to $89 in 2017;•    introduction of new fees such as late fees and over limit charges;•    fees on debit card transactions increased by $700 million; and•    all fees and charges have increased by $180 per credit card.The