The Customer Owned Banking Association is calling on the federal government to establish a formal roadmap for financial services regulations to help member-owned banks manage their current and future compliance obligations. While a torrent of legislative reform in the last decade has increased the regulatory burden across the financial services industry, mutual banks and credit unions have suffered disproportionate blowouts in costs to keep their businesses compliant. The increasing velocity of regulatory change has impacted small and medium sized customer owned banks in regional areas most acutely because they have fewer resources to adapt their products and systems to regulatory changes. A big challenge for some banks is the scarcity of qualified compliance professionals in regional areas, particularly in the fields of anti-money laundering and responsible lending. The only remedy for such institutions has been to absorb ballooning administrative costs after offering premium salaries and special allowances to lure compliance practitioners from the capital cities. In a pre-budget submission to federal treasury, COBA has called on the government to introduce a regulatory roadmap akin to the UK government’s so-called “Regulatory Grid”. The roadmap envisaged by COBA would give industry participants a two year window to prepare for compliance reforms emanating from six regulators – APRA, ASIC, ACCC, RBA, AUSTRAC and Treasury. “Collectively, Australia’s customer owned banks have more than $150 billion in assets, serve five million customers, and punch above their weight when it comes to delivering competition and market-leading service,” said COBA chief executive, Michael Lawrence. “Yet the relatively small size of these individual organisations compared to their ASX-listed counterparts means that existing risk and compliance resources are stretched, leading to a disproportionate burden through the increased costs of regulation.  “This makes it harder to keep up with the tsunami of regulatory change we are seeing in the financial services sector, in turn impacting their ability to compete. “Better coordination and mapping of regulation can help reduce this burden and ensure that the sector continues to deliver for its customers and the economy.” COBA is seeking government funding for a pilot of the Roadmap proposal in the upcoming budget, arguing that it would help to improve productivity of compliance implementation programs in the banking sector. Lawrence indicated that the surge in financial regulations in recent years had inflated the compliance costs of large credit unions and mutual banks by around $2 million each. The Roadmap is part of a wider campaign by COBA to restore proportionality in financial regulation that avoids putting small deposit-takers at a competitive disadvantage to the major banks. “A whole-of-system approach to regulatory change in the financial sector is needed to ensure that regulatory change is proportionate, orderly and coordinated,” COBA told the government in the pre-budget submission. “This will reduce the impact that regulatory change has on financial system competition and efficiency and on customers in terms of cost and opportunity cost.” COBA maintains that compulsory investment on compliance projects is crowding out funds that would otherwise be earmarked for customer, innovation and growth initiatives. “The ‘drop-dead dates’ for regulatory projects are pushing higher value projects aside,” it observes in the