The Australian banking industry is facing tough calls from policy-maker led by opposition's Mr. Joe Hockey.

Mr. Hockey is now seeking new inquiries on the safety nets put in place by the Federal government led by then Prime Minister Paul Rudd that establish guarantees under the so-called Financial Claims Scheme that directly benefits the country's large financial institutions.

"There is a strong and compelling argument to have that funding guarantee in place for smaller players, but I'm not necessarily sure that a bank that makes a $4 billion profit, such as NAB did today, necessary needs to continue to have that guarantee," he told ABC Television last night. "I will leave that to the ongoing debate."

The banking industry group, on the other hand, said it is willing and open to these new inquiries, although this is just a repetition of previous ones.

Bankers association reacts

The Australian Bankers' Association (ABA) said in an emailed statement it would participate in any inquiry into competition in the banking and financial services sector.

The ABA was responding to today's call in Canberra from a Liberal Senator and an Independent Senator for a Senate inquiry into competition within the Australian banking sector.

Steven Münchenberg, Chief Executive of the ABA, said: "If this inquiry goes ahead, a good starting point would be to read the submissions and reports from the half dozen inquiries into aspects of competition in banking and financial services which have been held in the past two years."

Previous inquiries on aspects of banking competition:

1. Senate Economics Committee - Banking Amendment (Delivering Essential Financial Services for the Community) Bill 2010

2. Senate Economics Committee - Competition and Consumer Legislation Amendment Bill 2010

3. Senate Economics References Committee - Inquiry into Access of Small Business to Finance 2010

4. Senate Economics Committee - Inquiry into Bank Funding Guarantees

5. House of Representatives Economics Committee - Inquiry into competition in the banking and non-banking sectors

6. Senate Economics Committee - Inquiry into Aspects of Bank Mergers

Mr Münchenberg said: "There is no doubt that the global financial crisis (GFC) has meant that there is less choice. But that doesn't equate with a lack of competition."

"The main reason banks have a greater market share at the moment is because Australia's solid, healthy banks stepped in to fill the credit gap left when other smaller lenders, particularly non-bank lenders, were forced out of the market by soaring funding costs."

"Had banks not increased their share of lending to home buyers, businesses and others, Australia would have experienced the sort of credit rationing that has badly damaged the economies of some other countries."

"But there are signs of life in the securitisation market and we have recently seen some non-bank lenders come back into the marketplace."

"There is clear evidence of competition in Australia's banking system. In the past two years, banks have slashed, or removed altogether, a range of unpopular fees, such as late payment and overdrawn account fees, as they fight for customers' business. For borrowers, banks are also offering a range of rates on mortgages and for savers, attractive rates on term deposits and online accounts."

"We also need to be wary of any proposals to re-regulate the banks when new international rules are still uncertain and their impacts on Australia are unclear."