Australia’s banking industry may see more movement away from traditional models, as well as increased levels of competition in the future, thanks to updated regulatory and legislative reforms from the federal government to enhance the presence of credit unions, building societies and other customer-owned banks in the nation’s financial landscape.
The Australian government has chosen to adopt all eleven recommendations of a recent inquiry into Reforms for Cooperatives, Mutuals and Member-owned Firms. These reforms are set to put customer-owned banks on more equal legislative footing with their bigger competitors.
The recommendations from the review include improving access to capital for regulated co-ops and mutuals; inserting a definition of ‘mutual company’ into the Corporations Act; and altering income tax legislation to help mutuals raise capital.
Federal Treasurer, Scott Morrison, said that the inquiry was commissioned to see how mutuals and co-ops could be better supported and make a bigger contribution to the nation’s economy:
“As Treasurer, I want to see more competition and more options for customers, especially in banking and financial services. I want to see more competitive markets by putting customers at the centre.”
“Mutuals, co-ops and member owned firms, including customer owned banks, can deliver on these outcomes. These organisations are all about the customer, because they are owned by them.”
Among those welcoming this decision is the Customer Owned Banking Association, with acting CEO, Dominic Dunn, particularly welcoming the measures to improve the sector’s capacity to raise capital:
“Greater capacity for customer owned banking institutions to raise capital will increase their potential to grow, take opportunities and invest in technology.”
“We have four million customers and $108 billion in total assets and we bring an unmatched customer focus to the retail banking market.”