Weekly Update: 8th September 2023

“Unfortunately, the recent productivity record isn’t encouraging…..the problem is not a lack of ideas. Instead, it is in building the consensus within society to implement some of these ideas. This is, fundamentally, a political problem, and it is a major problem. If we can’t build a consensus for changes, the economy will drift and there is a material risk that our living standards will stagnate.”

– Reserve Bank Governor, Phil Lowe, in his speech ‘Some Closing Remarks’ at the Anika Foundation

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Feature:

ABA submits proposed new Banking Code to ASIC 

In a major step to strengthen customer protections and maintain trust in the banking sector, the Australian Banking Association (ABA) has submitted a proposed new Banking Code to ASIC for industry consultation. The Banking Code is a set of enforceable rights and entitlements for bank customers:

“The Banking Code is an important part of Australia’s regulatory framework, it gives customers significant extra safeguards,” said ABA CEO Anna Bligh.  

“The current Banking Code is the only Code in the financial services sector with ASIC approval and the industry is determined to maintain these high standards.”   

The proposed new Code adds new and increased protections for customers including:  

• an expanded definition for small business which means an additional 10,000 small business customers will have the protections of the Code.  
• new obligations for banks to meet with customers intending to act as guarantor to help them understand their obligations before accepting a guarantee.  
• a new vulnerable customer definition, acknowledging anyone can become vulnerable at any time in their life due to a life changing circumstance such as losing a partner or a job or becoming ill. 

Read more here.  

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Parliamentary Update:

• The Financial Accountability Regime (FAR) passed the Senate, without amendments, on 5 September.  
• The bill was first introduced into the House of Representatives on 28 October 2021. FAR will apply to the banking industry 6 months after it receives Royal Assent and 18 months later to the insurance and superannuation sectors. 
• The Assistant Treasurer Stephen Jones issued a media release upon the bill’s passage, describing it as the final major recommendation to Government made by the Banking Royal Commission.  
• Treasurer Jim Chalmers announced that Chris Barrett had decided not to take up the role as the Chair of the Productivity Commission and that instead, Danielle Wood has been appointed as the incoming Chair.  
• The Treasurer  conducted a key press conference following the release of the June quarter National Accounts. 
• Prime Minister Anthony Albanese met with China’s Premier Li Qiang on the sidelines of the East Asia Summit and announced he would visit China later this year. The PM will attend G20 Leaders’ Meetings over this weekend. 

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Policy Update:

• The ABA is very pleased to continue our four-year collaboration with associate member McKinsey by facilitating specialist risk-focussed round tables. On 7 September Line 1 Risk leaders from ABA member banks discussed the findings from McKinsey’s Australian and New Zealand digital and cyber security assessment. The key theme which emerged was the challenges in supply chain and third-party security. Third and fourth-party security is one of the most common threat vectors for Australian banks. 
• The ABA hosted the inaugural ‘Economics Series’ webinar today, in conjunction with the Australian Business Economists. Keynote speaker – founder and president of Keybridge Research Dr. Robert Wescott PhD – outlined the current significant economic issues impacting world economies: “We have a lot of cross currents flowing through the world economy today, with critical factors such as US growth, inflation, threats to the globalisation model, and the shifting sands in China all impacting the economy significantly in 2023.”   
  
  A recording of the webinar can be found here.

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Regulatory Update:

• APRA has released findings from a review on how entities are approaching the implementation of Prudential Standard CPS 511 Remuneration. Remuneration design was identified as being the area requiring the greatest uplift to existing practices, by approximately 80% of entities.  By contrast, more than 60% of entities surveyed considered remuneration governance to require only a low level of change. Approximately 70% of entities rated the overall change required from implementation as moderate.   
• Reserve Bank Governor made a speech ‘Some Closing Remarks’ at the annual fundraiser for the Anika Foundation. He covered his appointment, unconventional monetary policy through the pandemic and his lessons on communication due to public interpretation of forward guidance during the same period. 
• ASIC sued PayPal for alleged unfair contract terms with small businesses. 

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Economic Update:

• GDP increased 0.4 per cent in the June quarter and 2.1 per cent in the year to June 2023. 
• Data released on housing lending showed that:
  • Non-performing loans and loans-past-due increased slightly in the June quarter, but were still below 2020 / 21 levels. Non-performing loans increased $1.1b (7%) to $16.6b. 
  • The value of offset accounts fell $6.3b (2.5%) to 240b. 
  • The value of loans with mortgagee in possession has fallen to $267m. This is a drop of 9.2% from the March quarter and 20 per cent from December 2022. It’s the lowest it has been since March 2021. 
• Retail payments showed that in the year to July 2023 the value of:
  • ATM withdrawals fell 1.1 per cent. 
  • Spending on cards increased 9.8 per cent, with greater growth in credit cards (10 per cent) than debit cards (9.6 per cent). 
  • Payments made on the New Payments Platform increased 23.3 per cent. 
  • Cheque payments fell 21.6 per cent. 

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Communications and Media:

• The ABA published a media release about the proposed Banking Code, with The Australian newspaper running an extensive article outlining some of the key changes supported by COSBOA. Read the full media release here.
• The ABA shared the news on our LinkedIn channel about how more young people are falling victim to scams. Buying and selling scams, threat and penalty scams, and impersonation scams are the top three scams impacting young people. See the post here.

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Upcoming Submissions:

Published submissions

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Selected Media:

• SMH – The housing joke is wearing thin for the TikTok generation  
• AFR – Chalmers interviews RBA deputy candidates 
• AFR – Inside the never-ending war to fix the corporate regulator  
• AFR – Many mortgage prisoners still out there, say brokers  

Weekly Update