Financial Mutuals
Financial mutuals are self help organisations that generally engage in
deposit
taking and lending to their members, and include building societies, credit
unions and a number of
friendly societies. In Australia, they are commonly referred to as
Non Bank
Lenders.
Australian financial mutuals are subject to the same rules, regulations and
legal
standards as banks. They are Authorised Deposit-Taking Institutions
regulated under
the Banking Act by the Australian Prudential Regulation Authority (APRA),
and are incorporated under the federal Corporations Act. (Non financial
co-operatives are incorporated under state co-operatives
legislation.)
While today's building societies, credit unions and
a number of friendly societies offer similiar services, their original purpose
differed
markedly.
Friendly societies began in Australia in
the 1830's as social and welfare organisations. 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 progressively decreased, either through mergers with
each other or
demutualising and converting to a bank. Today, there are around 170
financial mutuals left
in Australia.
Building societies
Credit unions
Co-operative housing societies
Friendly societies
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,
many building societies have converted to banks or merged. There are 9
mutual building societies left in Australia as at November 2008.
Further information:
Abacus Australian Mutuals
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.
There were
124
credit unions operating throughout Australia at November 2008. Together
they hold
more than $42.5 billion in assets, providing community banking services to more
than three-and-a-half million Australians.
Further information:
Abacus Australian Mutuals
|
CO-OPERATIVE HOUSING SOCIETIES
|
Co-operative housing societies first appeared in New South Wales in 1935 and
were then known as
terminating building societies. The aim of a co-operative housing society is to
provide housing
finance to low and middle income home buyers.
Prior to 1956, housing societies secured
funds from banks and insurance companies who saw such lending as socially
desirable and a worthwhile form of long term investment.
In 1956, co-operative
housing societies were given access to Commonwealth/State Housing Agreement
funds to lend to low income families as part of the federal government's housing
policy. The societies on-lend funds from government sources and financial
institutions to members of the societies.
Further information:
Co-operative Housing Societies Association of NSW
Friendly societies have existed in Australia
since 1836. They had their origins in the English industrial revolution in
the 19th century, when 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.
In Australia, friendly societies were primarily formed to provide welfare
services to
their members
including 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, many friendly societies modified their role
to provide other services to their members, such as superannuation,
investments, retirement villages, travel services and
holiday facilities.
As at December 2007, there were 24 friendly societies registered with APRA,
with some
among the most
successful financial institutions in Australia.
In addition, there are a number of friendly societies that do not offer
financial products or life insurance and are not registered with APRA.
Further information:
Abacus Australian Mutuals
|
