The Customer Owned Banking Association (COBA) has urged the Australian Government to use its upcoming budget to prioritise a roadmap for financial services regulations that would help member-owned banks manage rapid regulatory change.
COBA Chief Executive Officer, Mike Lawrence, said regulatory change is a challenge for all regulated entities, but this difficulty has been particularly felt by customer-owned banks.
“Collectively, Australia’s customer owned banks have more than $150 billion in assets, serve five million customers, and punch above their weight when it comes to delivering competition and market leading service,” Lawrence said.
“Yet the relatively small size of these individual organisations compared to their ASX-listed counterparts means that existing risk and compliance resources are stretched, leading to a disproportionate burden through the increased costs of regulation. This makes it harder to keep up with the tsunami of regulatory change we are seeing in the financial services sector, in turn impacting their ability to compete.
“Better coordination and mapping of regulation can help reduce this burden and ensure that the sector continues to deliver for its customers and the economy.”
In a 2023-24 pre budget submission, COBA recommends Treasury allocate resources to fund a pilot of a roadmap detailing regulatory change over the next few years, similar to the Regulatory Initiatives Grid in the UK.
If developed in consultation with the financial services sector and other relevant stakeholders, Mark Nguyen, Director of Policy at COBA, said an Australian regulatory roadmap would assist regulators and policymakers to coordinate regulatory change and assist industry to plan and map out responses:
“The financial services regulatory landscape is continually changing, with new regulations coming at an accelerated pace, volume and complexity from several regulators, legislators, and policy makers. A modern, whole-of-system approach to regulatory change is needed to ensure the change is proportionate, coordinated, and orderly.
“APRA and ASIC have both put out individual timetables this year, but it is time to bring these together for a system-level view and coordinated approach. This will allow financial institutions to increase productivity in implementation programs, and will reduce the impact on financial system competition, efficiency, and customers in terms of financial and opportunity costs.”
COBA estimates that its larger members each spend around $2 million each year on projects for new regulation. This does not include costs for existing regulation.
In its submission, COBA said Treasury – as the agency responsible for overseeing the financial sector – would be ideal for producing the grid, with the Council of Financial Regulators in charge of coordinating activities relating to it. Priority regulators on the roadmap should include the Australian Competition and Consumer Commission, the Australian Prudential Regulation Authority, the Australian Transaction Reports and Analysis Centre, the Reserve Bank of Australia, and Treasury.
A copy of the full submission is available on request.
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