Financial Services Digest
21 April 2023
Developed by our expert team of financial analysts each week, this subscriber-only publication provides a comprehensive and insightful summary of updates across the banking, insurance and superannuation industries.
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Treasurer Jim Chalmers has released the long-awaited Review of the Reserve Bank of Australia and provided the Albanese Government’s in‑principle support for all 51 of the Review’s recommendations, which it wants to implement by 1 July 2024. Of note, the Review calls for the role of the RBA Board to be split, which would see a Monetary Policy Board established with responsibility for monetary policy and the RBA’s contribution to the financial system (excluding payments policy), and a Governance Board with responsibility for overseeing the management of the organisation.
The Government has stated that the implementation of the Review’s recommendations will require the passage of legislation which will reinforce the independence of the RBA, strengthen its mandate and clarify that Australia’s monetary policy framework will have dual objectives of price stability and full employment. Further to this, the Government will work with the RBA to agree to a new Statement on the Conduct of Monetary Policy, which it hopes to finalise before the end of the year.
The Coalition welcomed the release of the Review, with Shadow Treasurer Angus Taylor stating that the implementation of the review should be “as bipartisan as possible”. The RBA also welcomed the release of the Review, as well as the Government’s response. In a statement, RBA Governor Phillip Lowe said, “the recommended changes will build on [the RBA’s] strong foundation and strengthen the Bank’s governance and decision-making processes”.
In a joint press conference with Governor Lowe, Dr Chalmers also announced that Dr Iain Ross (former leader of the Fair Work Commission) and Elana Rubin have been appointed to the RBA Board to replace outgoing members Wendy Craik and Mark Barnaba.
The Women’s Economic Equality Taskforce has published its priorities for the upcoming Federal Budget on 9 May. The Taskforce provides non-binding advice to the Federal Government on measures for creating economic equality in Australia. The Taskforce has recommended the payment of superannuation for primary carers on Paid Parental Leave, a pay-rise for early childhood educators and aged care workers, and the abolition of the Childcare Subsidy Activity Test. In response, Minister for Women Katy Gallagher stated, “We are considering the Taskforce’s recommendations in the context of the 2023-24 Budget, including what we can responsibly deliver in a tight fiscal environment”. The Greens have called on the Government to accept all of the recommendations made.
- Last week, Treasury opened consultation on the Federal Government’s commitment to release a standalone Measuring What Matters Statement. The Statement proposes to track non-traditional measures of economic wellbeing by setting high-level objectives such as ‘meeting human needs’ or ‘supporting people to lead fulfilling lives’.
- On Tuesday, the Interim Economic Inclusion Advisory Committee published[PDF] its 2023-24 Economic Inclusion Advisory Committee report. The report provides non-binding advice to the Federal Government on measures to improve economic inclusion ahead of the May Budget.
- On Monday, the ACCC published[PDF] its latest Targeting Scams report, which notes that total combined losses reached in excess of $3 billion in 2022 and the average loss has increased by 224 per cent since 2020. Following the release of the report, the ACCC called for a united response from government, law enforcement and the private sector. In an interview, Assistant Treasurer Stephen Jones stated that banks needed to ‘lift their game’ and flagged the potential increase of fines and penalties.
- On Monday, Suncorp announced it had received a request from the ACCC to extend its review period of the merger acquisition of Suncorp by ANZ. ANZ has agreed to the extension of the review period which will now occur from 12 June to 28 July.
- On Wednesday, NAB released the findings of its survey of Australian savings habits. NAB found that the 55 per cent of Australians, and nearly two thirds of younger Australians, keep their money in a high-interest savings account.
- On Thursday, ASIC called for financial institutions to improve their approaches to handling scams after finding that Australia’s major banks approach to scams was less mature than expected, inconsistent, and victims were not always supported by their banks.
- On Tuesday, the Albanese Government opened consultation on its election commitment to set education requirements for financial advisers. The proposed legislation would require financial advisers to have 10 years of cumulative experience and no record of disciplinary action on the Financial Advisers Register. Consultation will close on 3 May.
Insurance (Life & General)
- On Tuesday, APRA and ASIC published[PDF] the latest data on life insurance claims and disputes for the 12 months to December 2022.
- On Wednesday, the ICA appointed Deloitte to complete a review into its response to the 2022 South-East Queensland and Northern New South Wales floods. The review will aim to identify lessons from the disasters to inform future industry responses to extreme weather events.
BNPL, Crypto, Fintech, Payment Systems & Non-bank Lending
- Last week, Coles announced that historical Coles Credit Card holder data may have been impacted following the Latitude Financial cyber incident. Coles moved its credit cards to Citibank in 2018.
- On Monday, the SMSF Association published its submission to Treasury’s consultation on the proposed changes to superannuation tax concessions. The submission highlights the contribution caps and balance thresholds already in place within the superannuation system which the Association believes will address the issues raised in the consultation over time.
- On Wednesday, APRA opened consultation on its proposed class exemption to own or control an RSE licensee. Consultation will close on 17 May.
- On Thursday, ASFA published a research report titled Equity and superannuation. The report notes that the superannuation system is delivering substantial improvements in retirement income and recommends that the Federal Government introduce Superannuation Guarantee payments on Paid Parental Leave Scheme and increase the upper threshold for the Low-Income Superannuation Tax Offset.
- On Tuesday, the RBA published the minutes from its April Board meeting, which note that the decision to pause rate increases was sound while the Board waited for additional data and updated forecasts.
- Also on Tuesday, AFCA announced the completion of its six-monthly update of the AFCA Datacube. The public database provides firms and consumers the most recent statistics on financial complaints.
- On Tuesday, ACSI published its latest research on disclosure of modern slavery risks among ASX200 listed companies. The report noted an improvement in the disclosure of modern slavery risks but that improvements in disclosure were stagnating.