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Royal Commission response: Challenger banks warn of unintended consequences

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Ahead of the release of the Financial Services Royal Commission’s final report, the Customer Owned Banking Association is urging Australia’s politicians to remember the critically important role of competition in delivering positive customer outcomes.

In an open letter, COBA and its member organisations urge politicians to remember that the regulatory response to the final report impacts more than the ‘Big Four’.

Smaller banking institutions are concerned that recommendations in the Final Report will be designed to address problems in the ‘Big Four’ and may have unintended consequences for smaller banking institutions, that are also regulated Authorised Deposit Taking Institutions.  

Customer Owned Banking Association CEO Michael Lawrence said that proportionate regulation is the best way to address the issues brought to light during the Royal Commission hearings.

“Addressing the issues of poor customer outcomes, lack of competition and greed can only be achieved with a proportionate approach to regulation.

“Responding with a broad brush approach to regulation that fails to recognise the different types of models out there will make it harder for smaller operators to exist and will ultimately reduce competition. That’s the last thing consumers need.

“Regulation may not necessarily be new legislation, but also a one-size-fits-all approach by regulators that are in a race to be the toughest cop on the beat.

“Competition isn’t just about having more players in the market, it’s about making sure each and every player has an equitable opportunity to compete against one another.

“A more competitive customer owned banking sector will make the ‘Big Four’ think twice about how aggressively they put shareholders ahead of customers.”

Mr Lawrence said the customer owned model has always existed to put customer interests first, not shareholder interests.

“Rather than pay out dividends to shareholders, customer owned banks reinvest profits back into benefits for customers through lower interest rates, lower fees, innovative technology and better services.

“Our model isn’t conflicted about who we are working for. The interim report of the royal commission was emphatic when it said banks put profits before people. In our model it’s people that come before profits.”


For more information please contact:
Mick Gibb
Corporate Affairs Manager
02 8035 8444 or 0423 149 494
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Media Contacts

Ashley Penny
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