Concerns about bank interest rates may encourage some lenders to quit wealth management in Australia, a legislator has claimed.

A senior political figure reportedly claims Australian banks will exit wealth-management because this area has caused them problems with regulators and for too little commercial reward.

“You will see over time banks will get out of their wealth management businesses because it is an area that has caused them problems and it’s a relatively small proportion of their business,” ruling Liberal Party lawmaker David Coleman is reported as having told Sky News Australia at the weekend. “I’m not sure I would support forced divestment,” he said.

The opposition Labor Party wants a Royal Commission into the banking industry, with some of its parliamentarians urging a breakup of the nation’s biggest lenders amid claims a lack of competition allows borrowing costs to become excessive.

An inquiry has found that of the 20 times bank lending rates moved out of step with the Reserve Bank’s benchmark rate since 2000, it was bad for borrowers on 19 occasions, Coleman reportedly said. Now regulators are able to go into banks, get documents and will identify whether an institution was justified in raising interest rates, he continued. Banks and their executives could face action in terms of misleading or deceptive conduct.