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COBA has praised the government on moving quickly to allow all credit unions and building societies to use the term ‘bank’.
Australia’s customer-owned financial institutions are authorised deposit-taking institutions (ADIs), like banks, and are subject to the same prudential regulatory framework as banks and the government’s deposit guarantee under the Financial Claims Scheme.
“It makes sense that all ADIs should be able to choose to use the term ‘bank’ to explain what they do – which is banking,” said the CEO of the Customer Owned Banking Association, Mark Degotardi.
“The historic restriction on use of the term ‘bank’ by ADIs with more than $50 million in capital is out-of-date and no longer relevant,” he said. “We welcome the government’s move to level the playing field.”
There are currently 18 customer-owned banks providing in the retail banking market. COBA believes these former credit unions and building societies are likely to be joined by many of the 60 other customer-owned banking institutions currently trading as credit unions and building societies.
“Some credit unions and building societies may prefer not to rebrand but at least now they will have a choice,” he said.
“This draft legislation is the latest instalment of the government’s agenda to promote competition in banking. COBA congratulates the government on its commitment to this agenda and its delivery of positive reform.
“We look forward to engaging with the government on the draft legislation.”
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