The federal government might be close to giving the mutual banking sector some of what it wants via the upcoming report of the Review into small and medium-sized banks.
The Council of Financial Regulators has said it plans to provide the report of its Review into these banks, conducted with the Australian Competition and Consumer Commission, to the government by next Tuesday.
Andrew Leigh, Assistant Minister for Productivity, Competition, Charities and Treasury in a speech to the Business Council of Co-operatives and Mutuals’ CEO Strategy Roundtable on Friday said: “in banking, we’re considering the barriers that small and medium-sized banks face – including mutual banks, which are so often embedded in the communities they serve.
“Your submission to the recent Review made a strong case for proportional regulation, and for recognising the mutual model in our broader competition strategy.”
Given the final report of the Review is imminent, Leigh must be across its draft recommendations.
Thus his comments may read as suggesting that for mutual ADIs, at least, some form of “proportional regulation” will be among the Review’s findings.
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Two weeks ago, the Council of Financial Regulators said it discussed policy changes that could better support competition, “including introducing greater proportionality in certain areas of regulation, and measures to facilitate entry, sustainability and growth for small and medium-sized banks.”
The Customer Owned Banking Association has called for “a tiered regulatory approach, aligned with a bank’s risk profile and governance structure.
“This would align regulation with the actual risks posed by different parts of the banking sector, easing the undue burden placed on customer-owned banks” COBA said last month.