Banks send open letter to politicians

The Customer Owned Banking Association (COBA) has sent an open letter to politicians in Canberra, ahead of the release of Commissioner Kenneth Hayne’s final report this evening.

COBA has urged policymakers to remember the “critically important role” of competition in the banking sector as a means to delivering positive customer outcomes, noting that regulatory responses to the commission’s report could impact more than just the big four banks.

The industry association, which represents mutual banks, credit unions and building societies, stated that smaller banking institutions are concerned that recommendations in the final report would be designed to address problems among major banks without considering the “unintended consequences” for the broader banking community.

Renewing his call for proportionate regulation, COBA CEO Michael Lawrence said: “Addressing the issues of poor customer outcomes, lack of competition and greed can only be achieved with a proportionate approach to regulation.

“Responding with a broad brush approach to regulation that fails to recognise the different types of models out there will make it harder for smaller operators to exist and will ultimately reduce competition. That’s the last thing consumers need.

The COBA CEO continued: “Regulation may not necessarily be new legislation, but also a one-size-fits-all approach by regulators that are in a race to be the toughest cop on the beat.

“Competition isn’t just about having more players in the market, it’s about making sure each and every player has an equitable opportunity to compete against one another.”

Mr Lawrence claimed that the customer-owned banking model does not contain the same conflicts of interests faced by traditional banks.

“Rather than pay out dividends to shareholders, customer-owned banks reinvest profits back into benefits for customers through lower interest rates, lower fees, innovative technology and better services,” he said.

“Our model isn’t conflicted about who we are working for. The interim report of the royal commission was emphatic when it said banks put profits before people. In our model, it’s people that come before profits.”

[Related: New reforms to fix regulatory ‘anomaly’ in banking sector]