HomeView 2015 Media ReleasesRegulator wraps red tape around ‘banking’

COBA is disappointed that APRA has introduced an anti-competitive new restriction on credit unions and building societies.

COBA is disappointed that APRA has introduced an anti-competitive new restriction on credit unions and building societies.

The regulator has issued a legislative instrument banning credit unions and building societies from using the term ‘banking’ in a ‘registered corporate, business or trading name or internet domain name.’

“This is just baffling,” said COBA CEO Mark Degotardi.

“The business of credit unions and building societies is ‘banking’ so why can’t they use the term in any way they wish?

“All Authorised Deposit-taking Institutions (ADIs), whether they trade as banks, building societies or credit unions, are authorised to engage in banking business.

“Banking Act restrictions on use of terms such as ‘banking’ by non-ADIs are meant to ensure potential customers are not misled into believing that such institutions have the same level of capital adequacy, depositor-priority and other prudential requirements that apply to ADIs.

“No-one is misled by a banking institution calling itself a banking institution.

“Restricting use of the term ‘banking’ by some ADIs but not others undermines competition and competitive neutrality in the banking sector.

“APRA acknowledges that all ADIs, including all credit unions and building societies, engage in banking business. Indeed, APRA allows all ADIs, including credit unions and building societies, to use the term ‘banking’ in marketing and branding material to describe their banking activities.

“This proposal by APRA came out of the blue two years ago and was strongly opposed by our sector and supported by no-one. Now it has been introduced with a new legislative instrument and without a Regulation Impact Statement.

“This new restriction will potentially create disruption and expense for credit unions and building societies that use the term ‘banking’ in a registered corporate, business or trading name or internet domain name.

“APRA’s move does not sit well with the recommendation of the Financial System Inquiry (FSI) for regulators to focus more on competition,” Mr Degotardi said.

The FSI called for better reporting of how regulators balance competition against their core objectives. The FSI said:

The Inquiry’s philosophy places a high level of trust in regulators to make judgements that balance the efficient, stable and fair operation of the financial system. While acknowledging that regulators often have a difficult task, there is room for improvement.

“Regrettably, in relation to this decision, APRA is not living up to the standard set by the FSI,” Mr Degotardi said.

For more information please contact:

Daniel McDougall, Senior Manager – Media and Communication

02 8035 8444 or 0407 637 541, This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Customer Owned Banking Association is the industry body for credit unions, building societies, mutual banks and friendly societies.  See coba3.nexusone.com.au

Download Media Release95.83 KB


284x148_man.jpg

Media Contacts

Mick Gibb
Corporate Affairs Manager
P: +61 2 8035 8444
M: +61 423 149 494
Email Mickcontact-arrow

COBA Alerts

To receive notifications about our latest Media Releases, Submissions and other news sent straight to your inbox, subscribe to COBA Alerts.