Nearly 200 senior representatives of credit unions and building societies – mutual banking institutions are calling on the Gillard Government to reaffirm its commitment to banking competition by announcing the retention of the $1 million cap for the retail deposit guarantee.

Abacus – Australian Mutuals, the industry body for credit unions, mutual building societies and friendly societies claim the major banks have dominated the landscape for too long and recent reforms like covered bonds give them an extra leg up.

It’s time for the Federal Government to deliver on its commitment to competition in banking, it said.

“The easiest and most effective way to do that is to retain the deposit guarantee in its existing form,” said Louise Petschler, CEO of industry group Abacus.

CEOs and Chairs of credit unions and mutual building societies across Australia will meet to discuss the future strategy for the industry and the next stage of their campaign to be the “fifth pillar‟ in the Australian banking system.

New Essential Research polling shows 58 per cent of the public believe the Federal Government should take action to increase competition between banks. The same poll shows 79 per cent of the public believe that the banks all behave the same, follow each other on interest rates, and do not offer real competition or choice.

“There is real demand for more competition in banking and the public want the Government get the policy settings right,” said Ms Petschler.

On 12 December last year, Treasurer Wayne Swan promised that the Government would promote a competitive and sustainable banking system. In a constrained budget environment, the Government has the best competition lever already in place – the deposit guarantee.

According to Abacus, retaining the guarantee cap at $1 million immediately strengthens competition and it does not cost taxpayers a cent.

“Credit unions and building societies call on the Government to now fulfil its promise on banking competition and deliver real choice to consumers,” said Ms Petschler.

“Consumers are looking for a better deal in banking. We want to work with the Government to deliver that better deal and let more consumers experience the benefits of banking with a credit union or building society.”'

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