The Customer Owned Banking Association is intensifying its campaign to secure regulatory capital relief for Australian credit unions and mutual banks after lobbying senior Basel Committee officials in Switzerland earlier this month.COBA chief executive Mike Lawrence met with the Basel Committee's Deputy Secretary General Neil Esho last week to push the case for more proportionality in the application of prudential rules and standards to small financial institutions.Lawrence was part of a high-powered international delegation organised by the World Council of Credit Unions (WOCCU) that advanced arguments for a review of the Basel framework to ensure that prudential regulation was "proportional" for less complex deposit-taking institutions such as credit unions.Lawrence and other delegates from Canada and the US told Esho that national prudential regulators felt obliged to apply Basel 3 standards to mutual deposit takers even though the framework was intended only for internationally active banks.In a letter sent to Esho on 3 April, the delegation urged the Basel Committee to issue new principles to guide national banking regulators, such as the Australian Prudential Regulation Authority, in the setting of capital risk weights and other prudential requirements for mutuals."Many national-level policymakers will continue to feel obligated to apply Basel 3 and other Basel Committee standards to non-complex, purely domestic deposit-taking institutions unless the Committee outlines more clearly the factors that justify applying less complex regulatory approaches to less complex institutions," the WOCCU delegation told Esho in the letter."We urge the Committee to issue additional guidance on proportionality in regulation in the form of a set of high-level principles or weighing-factors on when less complex regulatory approaches can be warranted."The lobbying push comes at sensitive moment for customer-owned ADIs in Australia as it coincides with APRA finalizing a new capital framework that is expected to lighten the regulatory burden of small financial institutions.However, the international lobbying effort might also indicate that APRA's prospective capital relief is not likely to meet the expectations of COBA's members.The attempt to step up lobbying efforts in Switzerland might be construed as the first stage in a long term bid to extract further concessions under the Basel 3 framework.The WOCCU delegation warned in its letter that Basel 3 framework was imposing unnecessary pressure on mutuals to consolidate with the effect of undermining competition and financial stability."Competition from credit unions and other mutual deposit-taking institutions can help promote financial stability by creating a more diverse financial system that is better able to withstand stocks," the WOCCU delegation told Esho."Without increased proportionality, the regulatory burdens associated with Basel 3 and other Basel standards will continue to exacerbate the "too big to fail" problem by allowing the largest deposit-taking institutions to use their market power to get even larger while at the same time increasing the rate of consolidation among community-based deposit taking institutions."