Credit union could break into business banking

Mr Hammond’s recommendations include legislative and regulatory changes to improve access to capital, inserting the definition of a “mutual company” into the Corporations Act 2001 and changing tax laws to help mutual businesses raise capital.

CUA chief executive Rob Goudswaard welcomed the Treasurer’s announcement and congratulated him on recognising that mutuals and member-owned firms have a key role to play in contributing to competition and offering consumers choices in the financial services sector.

Mr Goudswaard said: “The government has sent a strong signal to our members that the mutual sector has an important role to play in financial services and that we should be better supported.

“Unlike listed companies, existing regulations do not enable mutuals to easily go out to market to raise Tier 1 capital to fund things like improved member services or to take advantage of potential growth opportunities.”

Mr Goudswaard said that potential reforms to the tax laws, for example, could open up opportunities for many mutuals, including CUA, to utilise their franking credits for the first time.

CUA is primarily a residential mortgage lender, but the group’s CEO noted that it could soon be “branching out into business banking”.

The lender might also look to invest in capital through technology upgrades and innovation by collaborating with other mutuals, start-ups and fintechs.

“CUA looks forward to further consultation on the Hammond recommendations and to working proactively with the federal government, ASIC, APRA and our industry bodies — COBA and BCCM — to implement these important reforms,” Mr Goudswaard said.

“The Treasurer has noted that he is hopeful new legislation could be in place by mid-2018, and I thank him for recognising the need to move quickly on implementing these reforms.”

[Related: CUA ‘phases’ back into investor loans, cuts rates]