The Customer Owned Banking Association (COBA) has called on the government to reconsider the series of changes to banking regulation scheduled to unroll in the near future, given how the low interest rate environment is squeezing competition.
“To promote banking competition, the government should think carefully about phasing and targeting the enormous wave of regulatory change queued up for implementation over the next few years,” said Michael Lawrence, COBA CEO.
“Our members, who would rather focus on customer service, are managing relentlessly rising regulatory change and complexity.
“We are seeing a perfect storm as reforms from the royal commission converge with changes to APRA’s prudential regulatory framework.”
COBA is anticipating the government must step in with a stimulus package in order to ease pressure on the RBA to execute another rate cut.
“As the banking regulator APRA has warned, the worsening margin squeeze caused by very low rates hits smaller banks harder than the major banks,” said Lawrence.
“The margin squeeze reduces our capacity to apply competitive pressure. The very low rate environment makes it tougher to balance the needs of our savers and borrowers.
“Each new regulatory compliance deadline diverts resources from strategic priorities such as responding to technological change and customer expectations.
“We call on the government to more systematically assess the cumulative cost burden of continuous regulatory change in banking, particularly on customer owned banking institutions,” he concluded.
