COBA says legislative reform will spur bank sector competition

Michael Lawrence

Legislation to allow Australia’s customer owned banking sector to more easily raise capital will increase its ability to compete with the nation’s major banks.

“We welcome the Government’s draft bill, issued for consultation by the Assistant Minister for Treasury and Finance Zed Seselja, to implement these changes and we look forward to continued strong bipartisan support for the customer owned model,” said COBA CEO Michael Lawrence.

“As Treasurer, Prime Minister Scott Morrison championed this reform agenda with the strong backing of the bipartisan Parliamentary Friends of Cooperatives and Mutuals Group co-chaired by Nationals Deputy Leader Bridget McKenzie and Shadow Assistant Treasurer Andrew Leigh,” Mr Lawrence said.

“This is an important reform that will ensure our sector has greater access to capital, which is critical to our capacity to grow.

“This legislative overhaul is a fundamental endorsement of the customer owned model and it will help boost competition in the banking sector and provide greater choice for consumers,” he said.

Mr Lawrence said the changes to the Corporations Act will, for the first time, positively define the core elements of a mutual company and amend flawed demutualisation provisions.

“These historic legislative reforms will provide greater access to regulatory capital and help ensure our members can grow more quickly and undertake important investments, while remaining well capitalised.

“With an enhanced capacity to write more loans and provide better quality services to current and prospective members, our sector will be able to apply more competitive pressure in the banking market,” Mr Lawrence said.

COBA has worked closely with the Business Council of Cooperatives and Mutuals to secure these reforms. COBA is the industry body for mutual banks, credit unions and building societies. With four million customers, total assets of $113 billion and 71 member institutions, the customer owned sector together holds the largest pool of household deposits and the largest housing book outside the big four banks.