Banking competition and mutuals

The Senate Economics Committee Report on Competition within the Australian banking sector contains a number of recommendations with specific relevance to mutuals:

  • Recommendation 18
    11.73 The Committee recommends that mutual financial intermediaries be allowed to refer to themselves as a ‘mutual bank’ or ‘approved banking institution’ and use terms such as ‘credit union bank’ in their name.
  • Recommendation 35
    15.18 The Committee recommends the taxation arrangements applied to bank deposits and mutual ADI deposits should be reviewed by the inquiry into the financial system.
  • Recommendation 36
    15.24 The Committee recommends that the Government require Treasury to review the GST input tax arrangements for mutual financial intermediaries having regard to the comments in the Henry Tax Review.
  • Recommendation 37
    15.33 The Committee recommends that the Government require Treasury to review the treatment of building societies and credit unions in the franking credit arrangements and report publicly on the advantages and disadvantages of various options.

The Government Senators also issued a minority report including the following:

  • Recommendation 4
    The government senators recommend the Government continues to work in developing the market for bullet RMBS as an alternative to traditional RMBS. This will help smaller lenders diversify and broaden their funding and access cheaper funding to compete more effectively.
  • Recommendation 5
    The government Senators recommend that the Government’s commitment to allow banks and mutuals to issue covered bonds should remain a priority of the Government.

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