Credit union, building society correction on banking reform debate
13 December 2010
Abacus – Australian Mutuals is the industry body representing credit unions and mutual building societies. In commentary on the Government's banking competition policy today a number of commentators have made inaccurate claims about mutuals. Clarification is provided below.
The reform package includes sensible measures that will boost competition.
- Reforms proposed to improve the awareness of the prudential system will attack the perception that only the biggest banks are regulated.
- The campaign and "government protected" seal are significant reforms that will allow regional banks and mutuals to combat consumer misconception about the regulatory system, encouraging more choice.
- Unfair/excessive exit fees are anti-competitive and warrant attention.
- Expanding the AOFM's RMBS investment, focusing on bullet bond market and design, and support for CUBS aggregated wholesale funding will improve cost of funding. While more work is required, these initiatives are a positive start.
Credit unions and mutual building societies do not charge high exit fees.
- Claims that credit unions and building societies are hurt by bans on exit fees are false.
- ASIC's survey of exit and entry fees in mortgages clearly showed that credit unions and mutual building societies charge the lowest exit fees in the market. The report can be downloaded from ASIC and Treasury's websites.
- Data sourced today from Canstar Cannex shows that over 50% of credit unions and building societies have no exit fees at all. Where they do have them, they are on average around $400, lower than banks and non-ADI lenders.
- Mutuals do not support unfair fees; excessive exit fees are unfair and restrict competition.
Credit unions and mutual building societies offer national access points.
- Claims that credit unions and building societies do not have access points are false.
- Credit unions & building societies have more branches than the Commonwealth Bank.
- Credit unions and building societies own one of largest ATM networks in the nation, rediATM which has ATMs in more locations than the CBA network.
- Any credit unions and building societies not in the rediATM network have no-fee access points via Westpac ATMs nationally.
- Australia Post outlets already provide further access points for CUBS members.
Abacus comment:
"It's no surprise that the banks and their supporters want to fight back on any reforms that aim to increase competition," said Louise Petschler, CEO, Abacus.
"Amidst the various political claims we should not lose sight of the strengths of this package and the base it provides to bring vibrancy back to a market dominated by four large banks."
"We call for commentators to make sure their statements are accurate, especially when discussing our strong mutual banking sector with its 4.5 million members around the nation."
Louise Petschler is available for interview.
Please contact Abacus care of Media Manager Pamela Eldridge on 02 8299 9024 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
