Deloitte report finds work to be done on banking reform

18 December 2016

A Deloitte Access Economics report commissioned by the Customer Owned Bank Association (COBA) has found there has been limited progress on many Financial System Inquiry (FSI) recommendations handed down two years ago.

The Deloitte report also considered the recent Senate Economics Reference Committee inquiry into co-operative, mutual and member-owned firms, noting its recommendation that Government consider the impact of regulation on co-operatives and mutuals.

The Deloitte report focused on recommendations 1,2, 3 and 30 of the FSI.

Progress on Recommendation 30, which would require financial regulators to explain how they balance competition with other mandates, has been slow.

Mark Degotardi, CEO of COBA, said “this is particularly disappointing because regulator decision-making can have a significant impact on competition.”
“The customer owned banking sector wants to see more urgency from government and regulators in implementing the key FSI reforms.”

Two examples mentioned in the Deloitte report were APRA’s approach to regulatory capital instruments for customer owned banking institutions and APRA’s application of the cap on investor lending growth, he said.

The Deloitte report also sets out a draft terms of reference for a Productivity Commission review of competition in the financial system.

The BCCM believes customers are well aware of the problems in our banking system, dominated by the oligopoly of the big four.

Customers are already voting with their wallets and moving to customer-owned banks because customer owned banks put people before profit.

The BCCM encourages people to make a strong choice in favour of trusted, ethical providers for their services like banking, health insurance and super.

#switchnotbitch is a playful social media campaign that aims to prod consumers into shopping around for mutual alternatives.

But reform to allow better access to capital for customer owned banks and credit unions would even the playing field, increasing customer choice and reducing the “too-big-to-fail” risks in the current Australian financial system.