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COBA releases roadmap to fix competition issues in banking sector

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The Customer Owned Banking Association is urging Australia’s political candidates to commit to improving competition in the banking sector ahead of the Federal Election.

COBA has put forward a ‘Competition Agenda’ to shift the focus onto issues of competition after 12 months of findings of misconduct were aired in the Royal Commission.

COBA’s ‘Competition Agenda’ calls on all incumbents and candidates to adopt a four-step agenda that would boost competition in the banking sector and provide consumers with greater choice in the retail banking market.

The four steps include:

  1. Empower consumers by raising awareness and reducing barriers to switching
  2. Accommodate the customer owned model
  3. Improve regulator accountability and regulator focus on competition
  4. Recognise the anti-competitive impact of regulatory compliance costs and ensure regulatory measures are proportionate and targeted

Each of the four-steps includes a series of recommendations to achieve each agenda item. The list of recommendations is included in Table 1 while the full ‘Competition Agenda’ can be read here.

Customer Owned Banking Association CEO Michael Lawrence says the solution to the endless cycle of misconduct in the banking sector is to promote competition.

“The Royal Commission has put the spotlight on banking conduct, it’s now time to shift the focus to banking competition. Without robust competition, the ‘Big Four’ will continue to put their customers last.

“If the ‘Big Four’ aren’t scared of losing their customers, they have no incentive to start treating them better and putting their interests first.

“As the Federal Election looms, many Australians will want to know what candidates and parties will do to fix the banking sector.

 “COBA’s ‘Competition Agenda’ provides all candidates with a straightforward road map to improve competition and improve customer outcomes.

“Now is the opportunity to implement the legislative and regulatory frameworks to improve competition in the banking sector.”

A PDF version of the media release can be read pdfhere43.64 KB.

For more information please contact:

Mick Gibb
Corporate Affairs Manager
0423 149 494
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Table 1: ‘Competition Agenda’ recommendations for greater competition

Step

Agenda Point

Implementation recommendation

1

Empower consumers by raising awareness and reducing barriers to competition

  1. Allocate resources to raising consumer awareness about:
  • the deposit guarantee under the Financial Claims Scheme
  • customer owned business model as an alternative to investor-owned business model, and
  • the imminent introduction of Open Banking.

2. Establish a Taskforce comprising Treasury, ACCC and ASIC, with input from industry and consumer groups, to identify barriers to switching and ‘no regrets’ measures to lower those barriers.

2

Accommodate the customer owned model

  1. Implement the Hammond Review recommendation to streamline regulator approval processes for mutual capital instruments.
  2. Amend GST RITC 16 to reduce the anti-competitive impact of input taxing on customer owned banking institutions.
  3. Maintain capacity for customer owned banking institutions to have banking relationships with local councils, schools, hospitals and other public sector entities.
  4. Introduce a corporate diversity clause into regulator mandates, or Statements of Expectations, to ensure APRA and ASIC explicitly consider the mutual model when developing regulatory measures.

3

Improve regulator accountability and regulator focus on competition

  1. Permanently appoint ACCC to the Council of Financial Regulators, as recommended by the Productivity Commission.
  2. Amend APRA’s mandate to introduce an explicit secondary competition objective and/or strengthen requirements in the Statement of Expectations for APRA.
  3. Ensure the new Regulator Oversight Authority gives due consideration to regulator performance in relation to competition.

4

Recognise the anti-competitive impact of regulatory compliance costs and ensure regulatory measures are proportionate and targeted

  1. Adopt COBA’s eight principles of proportionate regulation.
  2. Set regulator industry levies with sensitivity to the cost burden on smaller banking institutions and give more weighting to the systemic importance and market power of major banks.
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Media Contacts

Ashley Penny
Corporate Affairs Manager
P: +61 2 8035 8444
M: +61 431 932 950
Email Ashleycontact-arrow

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