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COBA welcomes clear progress on a number of fronts for better regulation and better policymaking – but much more remains to be done to ensure Australia has a world class approach to financial regulation.
This week:
APRA showed a commitment to competition and that it is willing to act on the regulatory burden on small banks
the new Financial Regulator Assessment Authority commenced its first review, into ASIC, and
the Australian Law Reform Commission confirmed that the laws regulating financial services are uniquely and unnecessarily complex.
“The first step in solving a problem is recognising you have one,” said COBA CEO Michael Lawrence.
“The critical next step is for policymakers and regulators to commit to transparency and effective coordination of regulatory change.
“We have proposed that the Government develop a ‘regulatory initiatives grid’, based on the UK model, that sets out the financial services regulatory workplan over the next two years in one document. The grid would cover all significant regulation, supervisory and data initiatives and would classify them according to operational impact on firms.
“This tool would allow policymakers and regulators to better consider the cumulative impact and timing of regulation.
“Regulation will continue to change as technology and the financial system evolve so it is critical that Australia has a world class approach to financial regulation that purposefully manages this regulatory change to minimise any unintended costs and consequences.
“We have had positive discussions about the ‘grid’ idea with Treasury, APRA, ASIC and the RBA and with the Government. We urge the Government to commit to the concept and allocate resources to fast-track its development and implementation.
“Customer owned banks compete in a market that is an established oligopoly where the four major banks hold substantial market power over their competitors and consumers.
“The constant ratcheting up of regulatory compliance costs is harming competition, innovation and consumer choice. The increasing diversion of scarce resources to meet new compliance obligations hits challenger banks hardest and gifts a competitive advantage to major banks. The ultimate losers from this entrenched trend are customers who need a vibrant, dynamic and innovative retail banking market.
“Improving regulator accountability has been a consistent theme in our advocacy agenda.
“The regulatory grid will ensure that all policymakers and regulators take a whole-of-system approach to the regulatory change agenda for retail banking to ensure that it is proportionate, orderly and coordinated.”