Customer Owned Banking Association, Media Release, 7 August 2025

The Customer Owned Banking Association (COBA) has welcomed the Council of Financial Regulators’ (CFR) report on small and medium-sized banks as positive first step in a broader reform journey.

“We welcome the Government’s statement of intent on improving the regulatory framework, and the greater consideration of how future policy changes will impact customer-owned banks,” COBA CEO Michael Lawrence said.

“We also support the shift to broadening the regulatory lens – not just to manage risk, but to actively promote competition and support innovation, which ultimately benefits all Australians. However, this is just the start of a broader reform journey and there is still important work ahead,” he added.

COBA has long advocated that the current regulatory framework disproportionately burdens customer-owned banks, creating an unfair competitive environment.

“Regulation plays an important role in creating a competitive banking landscape, and by striking the right balance, effective regulation establishes guardrails to address risks while promoting growth and innovation,” Mr Lawrence said.

“The current regulatory framework, while not intentionally anti-competitive, has created an uneven playing field that benefits large, investor-owned banks. This review is the first step to address those systemic inequities and create a truly competitive banking environment, and we look forward to working with the Government and regulators to achieve this,” he added. 

The industry association welcomed the report’s commitment for the Government and regulators to consider how future policy changes impact customer-owned banks differently compared to their larger peers. COBA is keen to see a more detailed exploration of several key areas from the report, including on proportionality and the additional tiering of regulations, reviews of reporting requirements, the Financial Claims Scheme (FCS), and liquidity support.

The industry association is also interested in exploring the concept of a ‘fourth tier’ with APRA and other CFR agencies and how changes to the FCS could reduce regulatory burden as well free up capital for innovation and competition for customer-owned banks

“Customer-owned banks offer a powerful counterpoint to the investor-owned banking model and provide purpose-led banking that puts people and communities first,” Mr Lawrence said. 

“This review is not just about regulation; it about delivering better outcomes for Australians. When the system creates an uneven playing field, it’s not just banks that are at disadvantage – it’s everyday Australians who lose out on better rates, more community investment, greater choice, and a more resilient economy”, he added.

As acknowledged in the CFR report, ‘a competitive and dynamic banking sector is critical to promoting better outcomes for households, businesses, the economy and society’.

Customer-owned banks serve more than 5.4 million Australians and have been providing purpose-led banking for almost 180 years.