Credit unions under threat
The number of credit unions in Australia has fallen by 36 per cent over the past five years, with fierce competition coming from major banks putting the sector at further risk.
This is one of the main findings of IBISWorld's market research report on credit unions, which found the number of institutions in this sector falling from 143 in 2006-07 to 92 in 2011-12.
While home loans remain their major offering, most credit unions also offer term deposits, insurance and wealth management services including financial planning.
But as major Australian banks attempt to increase their hold on the retail deposits (due to the rising cost of funds raised through wholesale markets - credit unions find it difficult to compete.
"This is bad news for credit unions as they rely heavily on retail deposits to fund their lending activities," IBISWorld stated.
The sector achieved zero growth in the 2011-12 financial year, with the number of companies in the industry expected to fall further over the next few years, IBISWorld added.
"As a result of rising competition and cost pressures, several credit unions have chosen to convert to banks so that they can access wholesale funding at a cheaper rate."
Recommended for you
ASIC has issued infringement notices to two AFSLs over financial advisers providing personal advice while they were unregistered.
Australian retirees could increase their projected annual incomes by as much as 51 per cent through comprehensive financial advice, according to a Vanguard study, but cost continues to be an issue.
AMP has announced a senior appointment to its North leadership team, reinforcing the firm’s commitment to the advice industry.
Despite the financial adviser exam being rooted in ethics, two professional year advisers believe the lack of support and transparency from the regulator around the exam is unethical.
