HomeView 2016 Media ReleasesCOBA welcomes focus on risk culture

COBA welcomes today’s announcement by APRA that the prudential regulator intends to refine and sharpen its approach to assessing risk culture.

COBA welcomes today’s announcement by APRA that the prudential regulator intends to refine and sharpen its approach to assessing risk culture.

“APRA’s information paper on risk culture correctly points out that certain behaviours impede risk management, and these include pursuing short-term financial interests, including personal interests, with little or no consideration of customer interests,” COBA CEO Mark Degotardi said.

“APRA’s intention to conduct a stocktake of current industry remuneration practices looks like a good place to start in its new approach to assessing risk culture. As APRA notes, remuneration frameworks, and the outcomes they produce, are important barometers and influencers of risk culture.

“The Parliamentary Joint Committee on Corporations and Financial Services reflected on risk culture in its May 2016 report on impaired loans when it said that certain banks' compulsion to deliver ever-increasing returns to shareholders has become the overriding driver of behaviour and culture in those banks.

“This is one of the reasons why the customer owned model has an important role to play in the retail banking market.

“Trust is more critical in financial services than in most industries because consumers find themselves at a disadvantage compared to the firms they’re dealing with. ASIC’s benchmark consumer research reveals that almost a third of Australians find dealing with money stressful and overwhelming.

“The Financial System Inquiry (FSI) found that to build confidence and trust in the financial system, firms need to take steps to create a culture that focuses on consumer interests. The FSI specifically recommended that the interests of financial firms should be aligned with those of consumers.

“The customer-owned model achieves this alignment and this is reflected in the sector’s market-leading customer satisfaction ratings, highly competitive pricing and community focus.

“Mutual banks, credit unions and building societies are subject to the same regulatory framework as listed banks and are competing in the same business of retail banking but their reason to exist is entirely different. Customer-owned banking institutions exist to meet the needs of their customers rather than to maximise returns for a separate group of shareholders.”

Media Release155 KB

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

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