Financial Services Mutuals
Financial services mutuals are self-help organisations that generally engage in
deposit
taking and lending to their members. They primarily provide
financial services to the consumer finance and housing markets.
Australian financial services
mutuals, otherwise known as customer owned banking institutions, are subject to
the same rules, regulations and
legal
standards as banks.
They are Authorised Deposit-Taking Institutions
regulated under
the
Banking Act 1959
by the
Australian Prudential Regulation Authority
(APRA)
and are incorporated under the federal
Corporations Act 2001.
(Non financial
co-operatives are incorporated under state co-operatives
legislation.)
While today's customer owned banking institutions offer similiar services,
their original
purpose
differed
markedly.
Building societies first
appeared in Australia in the 1840's, and until recent
times, where primarily small regional home lenders. Credit unions appeared after
World War 2
offering consumer banking services.
Since
financial deregulation in the 1980's, the number of financial
mutuals in Australia has declined, either through mergers with
each other or
demutualising and converting to a bank.
As of July 2021, there were 66 customer owned banking institutions in Australia,
with
$122 billion in deposits and assets in
excess of $153 billion, serving over 4 million customers.^
In recent years, co-operatives have been formed by ethical advisors and
investors to provide financial asset advice and services.
To promote competition in the Australian banking system, the federal Labor
government
in 2010 introduced reforms allowing large credit unions and building societies
to use the term 'bank' in their name.
As of June 2021, there were 31 mutual banks registered with APRA.
Further information:
Customer Owned Banking Association
Building societies offer a range of financial services to the
housing finance market. They operate in much the same manner as banks in that
their
members enjoy integrated financial services such as home loans, saving accounts,
cheque accounts, credit card access and financial planning and investment
services.
Building societies have their roots in the self-help movement which evolved in
England towards the end of 18th century. They first appeared in Australia in
the late 1840's and for the next 100 years, were relatively small regional
financial
institutions. From 1950 - 1970, the high demand for home ownership saw a rapid
expansion of the number of building societies, peaking at 178 in
1975.
Since the deregulation of the banking industry in the 1980's,
most building societies converted to banks or merged. As of July 2021, there
was one building society registered with APRA.
Further information:
Customer Owned Banking Association
A credit union is a savings and loan co-operative consisting of a group of
people who have agreed to help each other by regularly saving together and
lending these savings to one another at the lowest possible rate of interest.
Credit union members are not motivated to make profits, but by the desire to
improve the financial well-being of themselves and fellow members. Typically,
credit unions charge less than the major banks in loan interest and offers
competitive deposit rates.
As of July 2021, there were 34 credit unions registered with APRA.
Further information:
Customer Owned Banking Association
CO-OPERATIVE HOUSING SOCIETIES
|
Co-operative housing societies have over a 80 year history of assisting low to
moderate income earners to purchase their own home. They do this by partnering
with government to provide loans on more favourable terms to those available
from banks, building societies and securitised lenders.
As access to government home purchase projects have been severely restricted in
recent years most have sought to diversify their services by also operating as
a mortgage broker and offering general home loan and investment loan products
through their branches.
Friendly societies had their origins in the English industrial revolution in
the 19th century. Factory workers and labourers banded together to pool regular
contributions into a central fund to insure their families and themselves
against poverty as a result of illness and death.
Friendly societies are self-help organisations that have existed in Australia
since 1836. They were formed to provide welfare services to their members
including the supply of medical services, sick pay, and funds for those who
have fallen on hard times. They often provided the only organised social
activities available in the early years of colonisation.
As friendly societies
grew, their services became more diverse. Over the years, friendly societies
initiated pensions for the aged and permanently disabled, unemployment cover,
and allowances for travel in search of work.
With the emergence of government supported welfare such as pensions,
unemployment and sickness benefits, friendly societies modified their role and
activities to provide other services to their members, such as superannuation,
investments, insurance, retirement villages, hostels, travel services and
holiday facilities.
Today, friendly societies primarily offer financial products including
investment and funeral bonds,
scholarship plans and risk insurance.
As of the end of 2020, there were 10 friendly societies
registered in Australia.
FINANCIAL ASSET INVESTING
|
Australian Equity Co-operative Ltd
Delight Co-operative Ltd
Ethical Advisers' Co-operative Ltd
Maxilife Achieveable Housing Co-operative Ltd
Organic & Regenerative Investment Cooperative Ltd
Queensland Lifestyle Co-operative Ltd
The Innovation Co-operative Ltd
^ Source: Customer Owned Banking Association
|