In general, MFAA subscribes to the principle that governments should not intervene in markets unless it can be demonstrated that there is an imbalance in the competition which regulatory measures would correct. Under this principle, the Canadian government introduced its mortgage-backed securities regime in the 1980s and it is still operating successfully in 2014. Further, before being introduced, regulatory proposals should be examined to ensure they are competitively neutral across all players in the market (except in situations like the above where a market imbalance is identified). Examples of regulatory intervention which discriminate against or negatively impact competitively on some players deposit guarantees, wholesale funding guarantees, some Base III requirements on smaller lenders and the ban on deferred establishment fees. It has been argued by some that competition in the lending sector does not need to be characterized by a large number of lenders and that competition can be effective even if there are only a small number of (large) participants. That might be valid if those participants in the market were providing a wide range of choices of different lending products and interest rates. But, because in the Australian lending market four institutions command 80% of the market (roughly equally divided amongst the four), there is no competitive ‘blowtorch’ that forces them to innovate and differentiate. It is also significant that they are operating in a market that is characterized by considerable inertia by borrowers in switching to a competitor. That was not the case in the mid-90s through to 2007, when non-bank and smaller lenders with competitive rates and innovative products were able to take up to 42% of the market (non-bank lenders alone held over 15% at their peak in 2003).