Safety and Regulation
At Australian Central, we have always prided ourselves on our approach to business to ensure we operate in a financially responsible manner for the benefit of the credit union as a whole, for members, for staff and for our business partners for today and for the future.
Indeed Economic Responsibility and Governance Practices form part of our Corporate Social Responsibility framework.
In addition to a high degree of business and financial prudence in our operations, the following provides some further information on why Australian Central is a safe and secure financial institution and one in which members can feel confident in dealing with.
High degree of industry regulation through Australian Prudential Regulatory Authority (APRA)
It is reassuring to know that Australian Central, like all other Australian Deposit-taking Institutions (ADI’s) is regulated under the Banking Act and overseen by the Australian Prudential Regulatory Authority (APRA).
APRA is the prudential regulator of the Australian financial services industry. It oversees Australian ADI’s (such as banks, credit unions, building societies) as well as general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. APRA’s mission:
To establish and enforce prudential standards and practices designed to ensure that, under all reasonable circumstances, financial promises made by institutions we supervise are met within a stable, efficient and competitive financial system. (Source APRA website 1 October 2008)
This means that Australian Central is subject to and complies with the same stringent legally enforceable prudential standards as every Australian bank, so members can be confident that Australian Central complies with the highest level requirements for financial management and reporting.
Conservative Approach to Financial Management
At Australian Central we take our role as custodian of our members assets very seriously and engage in responsible business and financial practices.
Examples of these are:
- We do not engage in sub-prime lending
- We do not invest in securities which include sub-prime loans
- We maintain a conservative funding mix comprising a range of sources
- We have diversified revenue streams including free and commission income in addtion to interest income.
It's about people before profit
As a mutually owned organisation - owned by our members – Australian Central’s focus is on members and not shareholder returns.
- We provide financial services to our members (and not corporations), hence the very nature of our business is less risky than what may be the case for other types of financial institutions
- Our profits are returned to members in the form of competitive products and services, and not as dividends to shareholders. Our focus is on enhancing member value not maximising financial returns to shareholders.
- We encourage members to protect themselves, their debts and their assets, and if unforseen events occur we work with and assist members should they come into difficulty. As a result our delinquency rates are well below industry benchmarks.
It's about peace of mind
APRA's prudential standards mean our members can be secure in the knowledge that the level of supervision of credit unions is rigorous.
In addition to this we provide additional protection for members' deposits through our voluntary participation in the Credit Union Financial Support System (CUFSS). CUFSS is a long established arrangement created by Australian credit unions to help ensure a high level of safety and stability in the credit union movement and protect the interests of credit union members and depositors.
For further information on the Australian Government's guarantee for deposits within Australian Banks, Credit Unions and Building Societies, please refer below to the Prime Minister's announcement of 12 October 2008.
As part of a subsequent announcement released on 24 October 2008, financial institutions will have to pay a fee to guarantee deposits in excess of $1 million effective from 28 November 2008.
To view the communication issued by Prime Minister Kevin Rudd, click here.
To view the ABACUS fact sheet regarding the Government deposit guarantee, click here.
