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Swan backs Australian Mutuals

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In a recent media release the Federal Treasurer, Wayne Swan, has come out and praised Australian Credit Unions and Building Societies. In his weekly ‘Economic Note’ the Treasurer congratulated Mutuals on providing real competition to the big four banks and highlighted the lower home loan rates available from the Credit Unions and Building societies. The following is a direct quote from the Treasurer’s Economic Note released on Sunday 28 March 2010:

‘I've always been a big believer in the capacity of Australia's mutual credit unions and building societies to provide a safe and competitive alternative to the big banks. Of course, they meet the same high standards of prudential regulation as our banks, as they are supervised by APRA in the same way. And all deposits held with a credit union or building society are backed by the Government's Financial Claims Scheme up to $1 million – just like bank deposits – with this cap being reviewed for all in October 2011. So Australians can have absolute confidence in the safety of their money wherever their deposit is held.

Some 4.5 million Australians are members of a mutual, but many others may not be aware of the critical role they play in putting competitive pressure on the big banks. A comparison of recent independent ratings data shows the best standard variable home loan rate available from a mutual is something like 80 basis points below the average of the major banks, and that mutuals are 34 basis points cheaper than the big banks on average. As I said last week, the global financial crisis created some significant challenges for competition in the mortgage market. But I'm really encouraged to see our smaller lenders, including our mutuals, helping to put competitive pressure on the big banks, and I'll continue to support them all the way on this.’

It’s no secret the government and RBA are unhappy at the big 4 banks treatment of the Australian population throughout the global financial crisis. So it’s nice to see a high ranking government official come out and praise the positive contribution Credit Unions and Building Societies make to the Australian community.