COBA campaign calls for new banking regulation approach

22 August 2018
| By Nicholas Grove |
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The Customer Owned Banking Association (COBA) is set to launch its #MoreThan4 campaign in Canberra, which calls for a new proportionate approach to banking regulation.

In a speech to launch the campaign at Parliament House in Canberra later today, COBA CEO Mike Lawrence will call for a move away from one-size-fits-all to a proportionate regulatory regime.

“We need a proportionate regulatory regime that recognises there are #MoreThan4 banking providers in the market,” Lawrence said.

“With the release of the interim report of the Financial Services Royal Commission due next month, COBA members are concerned about future regulatory policy proposals that punish smaller banking institutions for the misconduct of the major banks.”

Lawrence said a proportionate regulatory regime would boost competition in retail banking, promote innovation and deliver more choice for consumers.

“Proportionate regulation will deliver important regulatory objectives, such as consumer protection and banking system stability, but in a more cost-effective, pro-competitive way,” he said.

“Proportionate regulation of retail banking is regulation that is proportionate to the risk, size and complexity of the regulated entity and is tightly targeted at the regulatory objectives.”

Lawrence said Australia’s banking market is not as competitive as it could be and a big part of the reason for this is the high regulatory costs placed on smaller banking institutions.

“While banking must be strongly regulated, excessive regulatory costs harm competition and consumers ultimately pay the price. Smaller banking institutions are subject to relatively higher regulatory costs due to the high fixed costs of regulatory compliance,” he said.

“Keeping a tighter rein on regulatory costs will allow challenger banks, such as customer-owned banking institutions, to grow more rapidly.

 “A more competitive customer owned banking sector will make major banks think twice about how aggressively they put shareholders ahead of customers.”

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