Mutuals seek a say in banking policy with new wish list

The customer-owned banking sector has released a federal election wish list, urging politicians to boost banking competition.

The Customer Owned Banking Association wants the competition ­regulator permanently appointed to the Council of Financial Regulators. Picture: iStock

The customer-owned banking sector has released a federal election wish list, urging whoever wins government to improve regulator accountability and boost banking competition.

The Customer Owned Banking Association (COBA), which represents the $117 billion industry, wants the competition ­regulator permanently appointed to the co-ordinating body for the nation’s financial agencies, the Council of Financial Regulators.

COBA says appointing the Australian Competition & Consumer Commission to the ­Council of Financial Regulators would help keep competition top of mind and was recommended by the Productivity Commission.

The four members of the Council of Financial Regulators are Treasury, the Australian Prudential Regulation Authority, the Australian Securities & Investments Commission and the Reserve Bank of Australia.

COBA’s wish list also looks to Britain, where from 2016 regulators the Financial Conduct Authority and the Prudential Regulatory Authority were required by law to include consideration of mutual banks in decision and policymaking processes.  COBA wants a similar obligation introduced here under a “corporate diversity clause” for regulator mandates, or statements of expectations, to ensure the banking and corporate regulator consider the mutual model as they develop regulation.

The federal election is scheduled for May and the Hayne royal commission and the fallout that followed for large banks and wealth groups will no doubt feature in the vote-pitching process. The Morrison government has released a $606.7 million response package that includes more funding for regulators.

Labor has also responded and wants to introduce a new levy on large banks and financial institutions of $640m over four years to boost the number of financial counsellors and facilitate compensation to victims of banks’ wrongdoing.

“As the federal election looms, many Australians will want to know what candidates and parties will do to fix the banking sector,” COBA boss Michael Lawrence said.

“COBA’s ‘competition agenda’ provides all candidates with a straightforward road map to improve competition and improve customer outcomes.

“Now is the opportunity to implement the legislative and regulatory frameworks.”

The federal government introduced a bank levy in 2017 on the big four banks and Macquarie. The 2019 budget papers showed it will raise $1.55bn in 2018-19 and is expected to reap $1.6bn in 2019-20.

COBA urges politicians to raise awareness of banking ­options outside the majors banks, noting that could be achieved by using “a fraction” of the bank levy receipts.

The association’s four-point plan also calls for a taskforce comprising Treasury, ACCC and ASIC, with input from industry and consumer groups, to identify barriers to switching bank accounts and how to lower any impediments.

The new open banking regime — which gives consumers more control over their data — is due to start next year.

COBA also referenced a Hayne recommendation to create a regulator oversight authority to assess the performance of APRA and ASIC, noting it should give “due consideration” to competition. Last week COBA ­applauded changes to the Corporations Act which define a mutual entity, reform demutualisation rules and assist the sector to more easily raise capital.