Powered by MOMENTUM MEDIA
subscribe to our newsletter

New bill to level playing field for mutuals

A CEO has welcomed the introduction of legislation that would “remove a handbrake” that has held back customer-owned banks from competing more fiercely with the majors.

The introduction of the Treasury Laws Amendment (Mutual Entities) Bill 2019 into Parliament has been welcomed by the chief executive of Heritage Bank, Peter Lock, who said the legislation will “remove a handbrake that’s been holding back customer-owned options… from becoming a more competitive force in the banking sector”.

The bill includes a new definition for a mutual entity as a company where each member has no more than one vote; changes to demutualisation rules to ensure that it is only triggered by an intended demutualisation, not by other acts such as capital raising; and the creation of a mutual-specific instrument that can be used to raise capital.

Mr Lock called for quick passage of the bill in Parliament, as it will allow mutual banks, credit unions and building societies to raise capital more easily and grow. Previous provisions had restricted the customer-owned banking sector’s capacity to issue the full range of regulatory capital instruments, such as convertible debt instruments, due to uncertainties around their tax status.

“These reforms are hugely important to Heritage Bank… The legislation will give us greater scope to raise the capital we need to invest and grow our business,” the Heritage Bank CEO said.

Advertisement
Advertisement

“It’s crucial that our parliamentarians make sure the legislation doesn’t get bogged down in the machinery of government and take action to ensure it is passed quickly, so customer-owned institutions can get on with the job of making the banking sector more competitive.”

The CEO noted that Commissioner Kenneth Hayne’s findings have “starkly illustrated what can go wrong when the greed and profit maximisation apparent at the big banks goes unchecked”.

“Customer-owned banks offer a different model that is focused more on people than profits, and it’s time we got the chance to better compete with the big bank model,” Mr Lock said, adding that consumers have been “crying out for more competition”.

The CEO of the Customer Owned Banking Association, Mike Lawrence, expressed a similar sentiment, saying that “with greater competition, comes greater consumer outcomes”.

While he welcomed the introduction of the bill into Parliament, Mr Lawrence said it’s important to ensure that it doesn’t “wind up on the legislative ‘to do’ list” and called for members of parliament to continue their existing bipartisan support.

PROMOTED CONTENT


“We can’t rest on our laurels. Now that the bill is in parliament, there is no need for these crucial reforms to end up in a legislative log jam,” he added.

“If the royal commission has shown us anything, it’s what can happen when competition is lacking and the big players are able to take their customers for granted.”

During the first reading of the bill in Parliament, Assistant Minister for International Development and the Pacific, Anne Ruston, said: “Our reforms will mean more opportunities for mutual organisations by allowing them to raise the funds they need to make long-term investments for the benefit of their members, and to compete effectively with shareholder-owned companies for the benefit of all Australians.”

[Related: COBA renews call for ‘proportionate’ banking regulation]

 

New bill to level playing field for mutuals
Heritage Bank
mortgagebusiness

Tas Bindi

Tas Bindi is the features editor on the mortgage titles and writes about the mortgage industry, macroeconomics, fintech, financial regulation, and market trends.  

Prior to joining Momentum Media, Tas wrote for business and technology titles such as ZDNet, TechRepublic, Startup Daily, and Dynamic Business. 

You can email Tas on: This email address is being protected from spambots. You need JavaScript enabled to view it.

 

 

Latest News

While some ASIC commissioners first learned about the proposal to scrap responsible lending laws after it was announced, APRA knew about th...

The major bank has confirmed the details of its new offering under phase two of the government’s Coronavirus SME Guarantee Scheme. ...

During the week ended 25 October, there were a total of 1,456 capital city homes taken to auction, the largest volume of auctions seen since...

FROM THE WEB

Join a group of highly informed brokers.

Broker Pulse, a community-driven knowledge base of lender performance Reveal exactly which lenders are making life easiest for brokers and their clients by taking this monthly survey and joining a group of highly informed brokers who leverage these insights every month.

JOIN NOW
podcast

LATEST PODCAST: Court cases and penalties

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.