Regulatory burden is a disproportionate threat to customer-owned banks, says COBA CEO
The Customer Owned Banking Association (COBA) and its affiliated banks have expressed support for the findings of the “Better Competition, Better Prices” report by the House of Representatives Standing Committee on Economics.
The report, resulting from an inquiry into economic dynamism, competition, and business formation, highlighted the disproportionate impact of regulatory compliance on customer-owned banks and the potential threat this poses to competition within the Australian banking sector.
Michael Lawrence (pictured), chief executive of COBA, emphasised the vital role of the customer-owned sector in maintaining competitiveness and providing consumers with a variety of service and product options.
He highlighted the regulatory burden as an undue challenge for customer-owned banks, citing as an example the case of BankWAW, a credit union operating in North East Victoria and Southern New South Wales, which reported that 80% of its new positions were aimed at supporting risk and regulatory frameworks among its staff of 90.
“It can be challenging for smaller banks to efficiently resource constantly changing regulatory standards,” Lawrence said. “Proportionate regulation allows smaller banks to invest in improvements for customers and provide much-needed competition in the banking market.”
The committee’s report suggested that increased competition would benefit consumers by offering more innovative and competitive products, alongside fostering enhanced economic dynamism.
COBA, along with nine of its members, participated in the inquiry.
“We thank the committee for the time they took to listen to our members, and for emphasising the importance of healthy and strong competition in banking as it ultimately benefits all Australians,” Lawrence said.
Among the 44 recommendations in the committee’s report was the endorsement of a regulatory grid, which aims to enhance transparency and resource allocation across the financial services sector.
“COBA will continue to advocate for more recognition of the customer-owned banking sector overall, and the diversity of banking business models,” Lawrence said. “We look forward to further discussions and collaboration with parliamentarians and regulators to ensure the sector can thrive in driving competition and providing strong, innovative banking solutions for consumers in Australia.”
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