The Customer Owned Banking Association (COBA) has welcomed the Government’s ministerial appointments.
“We congratulate Dr Jim Chalmers MP on his reappointment as Treasurer, Dr Daniel Mulino MP on his appointment as Assistant Treasurer and Minister for Financial Services, and Clare O’Neil MP on her reappointment as Minister for Housing. We look forward to working with the Government on its new policy agenda,” COBA CEO Michael Lawrence said.
Customer-owned banks serve one in five Australians and are collectively the most trusted in banking, according to Roy Morgan research. Mutual banks and credit unions are incredibly diverse, with some focusing on specific professional, ethnic, or geographic communities. This enables them to innovate and develop solutions tailored to their members, ensuring more Australians have their unique financial needs met.
“We need a diverse banking landscape where both investor-owned institutions and customer-owned banks can thrive, so Australians have genuine choice when it comes to their finances. Regulatory settings can either promote a dynamic market or inadvertently stifle competition, so we urge the incoming Government to prioritise policies that boost competition in Australian banking, which ultimately is better for consumers,” Lawrence said.
To rectify the current regulatory framework that benefits large, investor-owned banks, customer-owned banks are proposing the Government considers four key policy initiatives.
“We believe these reforms would create a more level playing field for customer-owned banks, allowing them to compete more effectively and continue to provide valuable and diverse services to their members and communities,” he added.
A tiered regulatory approach, aligned with a bank’s risk profile and governance structure, is a key recommendation. This would align regulation with the actual risks posed by different parts of the banking sector, easing the undue burden placed on customer-owned banks. When applied appropriately, this would benefit consumers by creating a more diverse and competitive banking sector, without compromising a strong and stable banking system.
COBA also recommends the reform of capital requirements for standardised banks, highlighting the critical need for a more equitable system. Under the current regime, customer-owned banks must hold more capital than major banks for comparable loans, which can constrain their ability to grow their loan portfolios as a higher proportion of funds are tied up.
COBA has also identified ways for the Government to leverage its balance sheet to address customer-owned banks’ funding disadvantage. Major banks benefit from their ‘too big to fail’ status being factored into their credit ratings – a funding advantage smaller institutions cannot replicate. Customer-owned banks also advocate for a more streamlined and efficient merger process, with current regulation consuming limited resources.
These four key policy asks were also included in COBA’s submission to the Council of Financial Regulators’ (CFR) Review into Small and Medium-sized Banks.
“Unless government policy prioritises diversity, community needs, and innovation, we risk diminishing a banking sector that caters to the real needs of people, competing only on price margins driven by scale and efficiency,” Lawrence said.
For nearly 180 years, customer-owned banks have offered a distinctive and community-focused alternative to traditional investor-owned banks.
ENDS
COBA’s Chief Operating Officer, Stephanie Elliott, is available for interviews. For further information or to arrange interviews, please contact media@coba.asn.au.
The Customer Owned Banking Association is the industry body for mutual banks, credit unions and building societies. For almost 180 years our sector has put customers first, returning profits to more than 5 million Australians who put their trust in customer-owned banks.