The move recognises the value of business model diversity in banking, it says
The Australian government has released its revised Statements of Expectations for the Australian Prudential Regulation Authority (APRA), where it outlined its expectations for how the prudential regulator will achieve its objectives, carry out its functions, and exercise its powers.
The move was lauded by the Customer Owned Banking Association (COBA), which it said paves the way into embedding the model of customer-owned banks into regulatory policy development – an area extensively advocated by the association.
Mike Lawrence (pictured above), CEO of COBA, said the announcement was a crucial step towards ensuring that customer-owned businesses, including customer-owned banks, are considered by default in policy and decision-making.
“It will further prevent assumptions of an investor-owned business model during regulation development and will support a stronger customer-owned banking sector that offers market-leading customer satisfaction and support beyond its size to communities around Australia,” Lawrence said.
In Section 4.3 of the revised SoE, in particular, the government said it expects APRA to “minimise the costs and burdens of regulatory requirements for regulated entities, including by applying proportionate requirements, considering different businesses’ models, and taking a principles-based approach to regulation, ultimately to benefit consumers.”
COBA noted that it’s the smaller banks, including customer-owned banks, that have been disproportionately impacted by the increasing pace, volume, and complexity of regulatory change. And in order to compete on a level playing field with investor-owned banks in Australia, the customer-owned model must achieve effective recognition and understanding, the organisation said.
“COBA has been advocating for this recognition for some time, and we are pleased that the government has taken this important step,” Lawrence said. “Embedding the knowledge of the customer-owned model into regulator decision-making and applying principles of proportionality to regulation will benefit the broader population and promote business model diversity as a source of systemic stability and resilience in the banking sector.”
Research showed that business model diversity is a must to achieve systemic stability. And what the government’s announcement does, according to COBA, is help to ensure that Australia also recognises the value of business model diversity in the banking sector.
The association said it looks forward to further discussions and collaboration with the government and regulators to ensure that the customer-owned banking sector continues to thrive and provide a strong alternative for consumers in Australia.
Use the comment section below to tell us how you felt about this.
