Heritage supports reform

THE big bank model in Australia suffers from an inherent conflict between the interests of customers and shareholders, which more people need to be aware of, according to Heritage Bank CEO Peter Lock.

Mr Lock’s comments come after Assistant Minister for Treasury and Finance, Zed Seselja, released draft legislation that will make it easier for customer-owned financial institutions such as Heritage Bank to raise capital.

The proposed legislation will make changes to the Corporations Act that will allow mutual financial institutions to issue new capital instruments.

It reflects the findings of the 2017 Hammond Review into reforms for the mutual sector.

The reforms would enable Heritage to generate the greater levels of capital needed to fund investment in growth and expansion.

Mr Lock said the Hammond Review represented an important step forward in enabling the mutual sector to become a truly competitive fifth pillar in the Australian banking sector.

“At present, mutual organisations have huge potential to provide more meaningful competition to the dominance of listed banks, but their ability to do so is severely held back by the barriers they face in costeffectively funding innovation and growth,” Mr Lock said.