HomeView 2015 Media ReleasesOpening Statement - Senate Inquiry into Credit Cards

Senate Standing Committee on Economics Inquiry into matters relating to credit card interest rates, Melbourne.

Senate Standing Committee on Economics Inquiry into matters relating to credit card interest rates, Melbourne.


Head of Public Affairs

Thank you for the invitation to appear before the Inquiry today.

COBA is the peak body for customer-owned banking institutions: credit unions, building societies and mutual banks.

Collectively the sector has $94 billion in total assets and more than four million Australians bank with a credit union, building society or customer owned bank.

We bring a fundamentally different model to the market, a model where customer interests are n Save ot in conflict with shareholder interests.

The customer focus of our sector is demonstrated in market leading customer satisfaction levels and also in highly competitive pricing across retail banking products, including credit cards.

The average interest rate for standard cards issued by our sector is 12.9% compared to 18% for the major banks.

Credit cards offered by customer owned banking institutions have substantially lower average rates, more free days and lower annual fees compared to the major banks.

The Canstar Online Database shows that of the 241 personal credit cards subject to analysis, and excluding bonus or introductory rates, 19 of the 20 lowest rate cards on the market are offered by customer-owned banking institutions.

The credit card market is delivering competitive products and choice to consumers, if consumers shop around.

The challenge is ensuring that consumers are informed and empowered to act in their own interests.

Surveys show low awareness by consumers about their credit card interest rate and about who offers the lowest rate cards.

Government, and agencies such as ASIC, should devote resources to campaigns to make sure consumers are better informed about the diversity and range of offerings in the credit card market and the risks of high-rate cards.

Well designed, well targeted communications should help to empower consumers.

But there is also more work to be done to promote competition in banking.

The Financial System Inquiry made 12 recommendations relating to competition, including measures to level the playing field in banking, increase regulator accountability and strengthen the focus on competition in the financial system.

APRA has already taken a significant first step in accepting and implementing the Financial System Inquiry’s recommendation to address unfair regulatory capital settings for mortgages.

This will help deliver a fairer regulatory framework and will enable smaller banking institutions to compete more effectively, to gain market share and to increase their visibility to consumers.

Promoting competition and promoting consumer choice will improve consumer outcomes in the credit card market.

I would like to sound a note of caution about more regulation.

The credit card market is highly regulated and has been subject to consecutive waves of regulatory reform in recent years, with the impact of the most recent initiatives still to be fully assessed.

To avoid unnecessary costs and unintended consequences for the great majority of people who use credit cards without detriment, any regulatory proposals that arise from this inquiry must be tightly focused on a clearly identified problem.

I will very briefly touch on interchange fees.

The Reserve Bank’s suggestion it may significantly reduce credit card interchange fees, if implemented, would mean that costs for services provided to merchants would have to be absorbed by card issuers or passed on to cardholders. In our view, merchants – not cardholders - should pay for benefits provided to merchants.

I would now like to pass to John Yardley to make an opening statement on behalf of Bank Australia and then we are happy to answer any questions.

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

Opening Statement


Media Contacts

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

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