P&N CEO, Andrew Hadley, welcomed the news announced in early April, that the Government will examine reforms to support mutuals, co-operatives and member-owned firms so that they can invest, grow and employ more Australians.
"Competition in retail banking is vital for the economy and in providing Australian consumers with genuine choice," Mr Hadley said.
"Currently, legislation does not recognise the mutual or co-operative model which results in an uneven playing field between mutual banks and the listed banks," he added.
The key issues to be examined by the government's appointed independent facilitator, Greg Hammond OAM, will be
- whether there should be legislative or regulatory changes to improve access to capital for Commonwealth-regulated co-operatives and mutuals; and
- whether ‘mutual enterprise’ should be defined in the Corporations Act 2001.
Mr Hadley said that an amendment to the Corporations Act would allow for the creation of a new capital instrument for mutual businesses. This has the potential to unshackle some very real impediments facing the mutual banking sector.
"Legislation currently deems that P&N is unable to raise capital by issuing securities to members without risking our mutual status. This clearly hampers our growth and development in this fast paced age of fintech disruption and digital banking. Our members expect all the services of a contemporary retail bank and we need capital to continue to develop and grow on their behalf," Mr Hadley said.
"And we know this solution can work. In countries where specific co-operative and mutual legislation exists, vibrant and sustainable mutuals not only serve their members but contribute to economic growth and diversity.
"Since the 2014 Murray Financial Services Inquiry, P&N Bank has strongly supported groups such as the Business Council of Co-operatives and Mutuals (BCCM), and our industry body, the Customer Owned Banking Association (COBA), encouraging policy makers to consider mutuals and co-operatives when contemplating regulatory frameworks and legislative reform for our sector.
"On behalf of all Australians, we very much look forward to the consultation process," Mr Hadley concluded.
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