Treasury urged to prioritise regulatory road map: COBA

The Customer Owned Banking Association (COBA) has recommended the Treasury to allocate resources in order to fund a pilot of financial service regulations road map to assist member-owned banks to manage rapid regulatory change.

In the submission, COBA stated that the difficulty of regulatory changes is particularly felt by small customer-owned banks, and with fewer risk and compliances resources available to them, it’s difficult to keep up with changing rules, thus, COBA suggested better coordination and a mapping of regulation could mitigate these burdens.

COBA chief executive Michael Lawrence said: “Collectively, Australia’s customer owned banks have more than $150 billion in assets, serve 5 million customers, and punch above their weight when it comes to delivering competition and market leading service.

“Yet the relatively small size of these individual organisations compared to their ASX-listed counterparts means that existing risk and compliance resources are stretched, leading to a disproportionate burden through the increased costs of regulation.

“This makes it harder to keep up with the tsunami of regulatory change we are seeing in the financial services sector, in turn impacting their ability to compete.”

COBA stated in the submission that the road map should work similarly to the Regulatory Initiatives Grid in the UK, which was proposed in the UK government’s 2020 budget to improve regulatory coordination through the introduction of the Financial Services Regulatory Initiatives Forum (FSRIF).

The FSRIF revealed in a single document the regulatory pipeline over the next two years that allows the financial services sector and other stakeholders to plan ahead and understand ongoing changes that will have significant cost and operational impacts.

COBA further suggested that the priority regulators for the road map (along with the Treasury) should include the Australian Competition and Consumer Commission (ACCC), the Australian Prudential Regulation Authority (APRA), the Australian Transaction Reports and Analysis Centre (AUSTRAC), the Australian Securities and Investments Commission (ASIC), and the Reserve Bank of Australia (RBA).

Mutual lender mergers  

In November last year, the mergers between Heritage Bank/People’s Choice Credit Union and Greater Bank/Newcastle Permanent were given the green light.

These mergers represent the changing face of the mutual banks/member-owned banks sector, which are looking to maintain a competitive advantage and grow their businesses over the long-term.

Both mergers are set to come into effect on Wednesday, 1 March 2023.

[RELATED: ‘Provisional yes’ as Heritage, People’s choice set to merge]