![CBA chief Ian Narev...Commonwealth Bank will be the first off the rank, appearing before the inquiry in Canberra.](/content/dam/images/g/q/p/q/o/c/image.related.afrArticleLead.620x350.grhafk.png/1473937819198.jpg)
The chief executives of the four major banks will be grilled for three hours each in front of a parliamentary inquiry which will challenge the banks' market power.
With the big four dominating the top four positions by market capitalisation on the Australian Stock Exchange – worth almost $400 billion collectively and backed by the deposit guarantee - the chief executives will be asked to explain their business practices.
From the government's perspective, the major banks must face greater parliamentary scrutiny given their competitive advantage over smaller rivals since the government's debt guarantee was introduced during the global financial crisis and the ongoing deposit guarantee.
Letters outlining a proposed 12 hours of testimony in the first week of October have been sent to chief executives, which has annoyed Labor members who said they were given 15 minutes' warning on Thursday afternoon that the hearings - in a non-sitting week in school holidays - had already been decided with the bank chiefs.
Commonwealth Bank will be the first off the rank, appearing before the inquiry in Canberra at 2pm on October 4, followed by ANZ at 9.15am on October 5, NAB at 9.15am and Westpac at 1.15pm on October 6.
"The hearings will provide an opportunity for the committee to question bank executives on a range of matters of interest to the community," Committee chairman Liberal MP David Coleman said.
"It's important that banks are accountable for their actions and the fact that they must now appear at least annually before the committee will help to ensure that is the case."
But Labor's Matt Thistlewaite, a member of the parliamentary committee, is unhappy about the process, calling it a "stitch up".
"Clearly the banks and the government have worked together to hide from proper scrutiny," he said.
"This is further proof that the Liberals are the best friends the banks have ever had."
A recent Reserve Bank of Australia study found the guarantees represented an effective subsidy worth between $1.88 billion to $3.75 billion to the benefit of the major banks' shareholders.
The inquiry will look at the banks' market power in the financial services system and is expected to scrutinise whether the Turnbull government's introduction of the effects test will help smaller financial institutions and fintech companies to create a more competitive market for the benefit of consumers.
The standing House of Representatives Economics inquiry, which will be chaired by Mr Coleman, a former merchant banker, will include Coalition members Julia Banks, Trevor Evans, Kevin Hogan, Scott Buccholz and Craig Kelly, who lobbied for a banking tribunal.
Unlike the parliamentary hearings of the Reserve Bank and the Australian Competition and Consumer Commission which only report on the agencies' activities, there are expectations the committee will make recommendations to Parliament within months outlining proposed changes to banking regulations to encourage a more consumer-focused and competitive industry.
The lessons of the telecommunication industry – including measures to encourage greater account mobility – will also be explored with a view to making it easier and more convenient for customers to shop around and transfer their finances from one institution to another.
Treasurer Scott Morrison has asked the committee to consider domestic and international financial market developments as they relate to the Australian banking sector and how these are affect Australia, developments in prudential regulation, including capital requirements, and how these are affecting the policies of Australian banks, the costs of funds, impacts on margins and the basis for bank pricing decisions.
It will also probe how individual banks and the banking industry as a whole are responding to issues previously raised in parliamentary and other inquiries, including through the Australian Bankers' Association's April 2016 six point plan to improve consumer protection.