Last Saturday I played in a 4 Ball Better Ball Comp. On the 17th green my partner marked his ball with a Tee Peg, approx two foot from the hole. My question is :- Would there be a panalty for me or one of the other players hitting the peg with their ball ?
It is recommended (in the Note to Rule 20-1) that a player use a small coin or other similar object, however, it is also permissible to use other objects such as a tee, divot repair tool, toe of a club, etc. Please refer to Decision 20-1/16.

As far as I know, not penality for hitting a ball marker. The only penality would be your ball not rolling as you intended it to. Which is the reason you can ask to have the ball marker moved out of your way before you putt.

Yes thats how I understood it, No Penalty. However picture this, Two players in a team comp, Player A putts up next to the hole, marks his ball with a Pitch mark repairer, his partner, player B on a shot, uses Player A Tee as a back stop. For the very same reason a player must not hit another ball while both balls are on the green. Interesting ?

Would be interesting, especially if you're playing a scramble, where you don't want to sink the tap in as it would end the hole before the rest of your team had a chance to sink their putts. Not sure how you would have to play it under those conditions. Might have to move the marker just to not have it come into play with the next putt.