Banking Competition Enquiry
Australia's customer-owned banking institutions will use the new Senate inquiry into banking competition to highlight their contribution to competition and to pursue measures to empower banking consumers.
Credit unions and mutual building societies have 4.5 million customers, more branches than the Commonwealth Bank, one of the largest ATM networks, and market-leading customer satisfaction. Credit unions and mutual building societies have around 9 per cent of the new home loan market and around 11.5 per cent of the household deposits market.
"This is a strong platform for growth but many commentators seem hypnotised by the big four banks and don't see that there is a real competitive alternative to the majors," said Abacus CEO Louise Petschler.
"That alternative is the mutual banking sector," Petschler said.
"For example, according to Canstar Cannex, 37 credit unions and 8 building societies offer a standard variable home loan rate that is lower than the lowest major bank standard variable rate.
"Consumers need to know they can switch with confidence to a credit union or a mutual building society. It is unfair that big banks benefit from entrenched misconceptions that they are somehow safer than other banking institutions, when all banks, credit unions and building societies are subject to the same strict prudential framework.
"Australia has a strong prudential framework and very well regulated banks, credit unions and building societies. The Government and the regulators, APRA and ASIC, have a crucial role in informing consumers that real choice exists.
"We want the Government and the regulators to effectively and energetically promote the fact that credit unions and building societies are as safe as banks and are regulated to the same high standards as banks. We have put forward some ideas on how to cut through with this message, such as changing the technical Banking Act term 'Authorised Deposit-taking Institution' – which means nothing to consumers – to clearer language, like 'Authorised Banking Institution'.
"A more competitive banking market benefits everybody," Petschler said.
