Reforms to the banking sector as recommended by the Financial System Inquiry must be pushed through immediately, says the Customer Owned Banking Association.
Customer Owned Banking Association (COBA) chief executive Mark Degotardi says there is no room for delays when it comes to Australia’s banking reforms.
“The banking market is concentrated, is described by the competition regulator as ‘a bit cosy’ and has left many consumers let down through financial scandals,” he said.
“The Financial System Inquiry issued a reform agenda in 2014 that the government has endorsed. That will reduce the advantages the larger banks have over their small counterparts, increasing competition and leading to better outcomes for consumers.
“However, the banking regulator APRA [recently] announced it is deferring a separate package of capital reforms until at least 2019 pending progress on the FSI capital reforms.”
Mr Degotardi said this would only result in a slowdown of implementation of the FSI agenda.
“APRA says new capital requirements for conglomerates may need to be changed once other initiatives have been progressed, including FSI recommendations one and three on resilience, so implementation is to be deferred to no earlier than 2019.
“Five years is too long between diagnosing the problem and applying the solution.
“The government’s timetable is by the end of 2016, APRA is to take additional steps to ensure our banks have unquestionably strong capital ratios in line with FSI recommendation one. Beyond 2016, APRA is to ensure our banks have appropriate total loss-absorbing capacity and leverage ratios in place, in line with FSI recommendation three.”
Mr Degotardi added that COBA is backing the government’s position that steps should be taken to reduce any implicit government guarantee and the perception that some banks are too big to fail.
“Australian consumers should not have to wait until 2019 or beyond for the implementation of reforms that will deliver a more resilient and competitive banking market,” he said.