Rhetorical props for mutuals

Credit unions and building societies got a dose of national publicity yesterday, courtesy of Treasurer Wayne Swan, who told Nine Network's Today show that banks had "behaved badly" towards borrowers, indicating an ongoing reform process aimed at building up the mutual sector.

"The Government is determined to see a new pillar in the banking system, particularly based on our mutual sector," he told the network.

"[This would be] particularly based on our credit unions and our building societies. They are safe and they're very competitive.

"They're supervised in the same way that banks are supervised, and, of course, you can get a far better deal, particularly, say, when you're looking for a mortgage. If you go to a credit union you may be able to get up to 100 basis points better in terms of your mortgage.

"The big banks behave in an arrogant way because they feel confident that their customers won't walk down the street to get a better deal."

Swan said the global economic crisis had resulted in a "concentration" in the banking system that left a need for more competition.

There is some speculation that the forthcoming package of policy measures on banking may include some props for mutual credit unions and building societies.

One possibility is in the detail of the new arrangements for the guarantee on retail deposits that will presumably form part of the package given that the current guarantee runs out in 11 months.