Introductory Video

The opening video montage featured the heads of our key regulators: Chair of the ACCC, Commissioner of ASIC and Outgoing Chair of APRA. They had some clear and direct messages for AFIA members and the financial services industry including:

• To first ‘tell the truth, proactively and in plain language’. Do more with industry codes. These are important and a key step in putting the ‘customer at the centre’. Gina Cass-Gottlieb, ACCC Chair.
• The four strategic priorities which are most relevant to AFIA: scams, design and distribution obligations (DDOs), the reportable situations regime (formerly breach reporting regime), and sustainable finance. Sean Hughes, ASIC Commissioner.
• It is important for businesses to ‘be prepared’ and ‘build resilience in good times’ as well as ‘reacting to crises’. All plans should have ‘menus of options’ to cater for different contingencies. Wayne Byres, APRA Chair.
  

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ASIC Executive Director, Financial Services & Wealth – Joanna Bird

 ASIC’s priorities

• ASIC’s latest Corporate Plan was published in August 2022 and includes four external and four internal priorities – external : Product design and distribution, Sustainable finance, Retirement decision making, and Technology risks; internal: Digital technology, Data and analytics, People and resourcing, and Modernising business registers.
• The four most relevant issues for AFIA’s members were highlighted:

1. Product design and distribution: Reduce the risk of harm to consumers of financial and credit products, caused by poor product design, distribution and marketing, especially by driving compliance with new requirements. 
2. Sustainable finance: Support market integrity through proactive supervision and enforcement of governance, transparency and disclosure standards in relation to sustainable finance. 
3. Retirement decision making: Protect consumers, especially as they plan and make decisions for retirement, with a focus on getting the right products and services (including superannuation products, managed investments, financial advice, factual information). 
4. Technology risks: Focus on the impacts of technology in financial markets and services, drive good cyber-risk and operational resilience practices, and act to address digitally enabled misconduct, including scams. 

• Joanna grouped these into three areas: major law reforms (DDO, RSR and FAR); major developments in risks in markets (including crypto, cyber/scams and greenwashing); and fostering capabilities (including digital and technological capabilities).
• ASIC is reviewing DDOs and their effect on improving credit outcomes for consumers. On the DDO regime, Joanna outlined ASIC’s expectation that financial firms must address consumer harms in their target market determinations. ASIC will start collecting data on ‘problematic debt’ this month, including data collected in the DDO regime.[1]
• As part of ASIC’s review of TMDs, ASIC is doing research into BNPL products, particularly reviewing their ‘implementation and product governance’ and focusing ‘especially’ on ‘target market determinations, data collection, and review triggers.’ They expect to make a public statement on this issue ‘sometime next year’.
• Joanna indicated that the DOO is proving to be a very useful regulatory tool.
• On the Reportable Situations Regime, ASIC will be publishing a public report ‘soon’, which will explore the relevant issues without mentioning individual financial firms.
• This report will address unnecessary compliance burdens and ensure the data being received is ‘consistent’, given many aspects of the form are responded to inconsistently and some companies are not reporting at all.
• Joannna indicated that ASIC assumes that where a regulatory system such as this exists, especially given the thresholds for reporting are set quite low, there should be reports. If regulated entities are not reporting at all, this is ‘worrying’ and ASIC may consider there might not be appropriate systems in place.
• On cyber and scams, ASIC expects significant effort from industry noting the significant harm not only to financial health but also to mental health caused by fraud and scams.
• ASIC is partnering with industry and other regulators on cybersecurity and is examining how financial firms detect and prevent scams, starting with the major banks, but widening to others.
• On digital and data capability, Joanna noted the ASIC capability review undertaken by the Financial Regulator Assessment Authority (FRAA), and more work needed on enhancing internal capability (Regtech and resources and skills) as well as stakeholder engagement.

The Sustainability Agenda panel session

Facilitator: Katherine McConnell, CEO of Bright.
Panel: Matthew Beattie, CEO of SIXT. Simon York, Partner at LEK Consulting. Nigel Freitas, Head of Corporate Affairs of Brighte.

This panel session explored recent trends and observations around sustainable finance, including investment opportunities and operational expenditure challenges, supply chain risks, taxonomy, climate-related disclosures and reporting, changes in community and regulator expectations, and current industry initiatives and roadmaps.

Discussion topics: challenge of investment by governments and consumers in sustainable products and infrastructure, partnership opportunities, significant task needed to transition transport, increasing cost of energy, and ‘green is the new black’.

RBA Deputy Governor Michele Bullock – Policymaking at the Reserve Bank

In a speech that was published here and generated much media attention, the RBA Deputy Governor discussed policymaking at the Reserve Bank.

• The speech was in two key parts: the first setting out the internal processes for making monetary policy decisions in the RBA; and the second addressing developments in the payments.
• In respect of monetary policy decisions, the RBA’s mandate is to control inflation while taking into account the impact of interest rates on employment and financial stability.
• Michele said the monthly (11 times per annum) Board cycle is unusual internationally, with most central banks meeting less frequently. This gives the RBA the ability to change interest rates more frequently, in smaller increments and at a faster overall rate, with more frequent evaluation of the evidence.
• The recent increase in interest rates was warranted as there is an important element of strong domestic demand behind the current high rate of inflation.
• Michele indicated that further interest rate rises should be expected, with the pace and timing determined by the domestic and global economy, noting the Board is prepared to do ‘what’s necessary’ to return inflation to the target band.
• In respect of payments, Michele noted that payments used to be regarded as the ‘boring plumbing of the economy’. A critical priority for the RBA is the development of a regulatory regime for payment systems providers to ensure a level playing field along with common access requirements. A second key priority is to support the shift to digital payments.

Hon Stephen Jones MP – Assistant Treasurer and Minister for Financial Services

• The Minister outlined his focus areas, including the Financial Services Royal Commission reforms yet to be implemented, consumer data right, credit and payments, and vulnerable customers experiencing cost of living pressures.
• The Minister thanked AFIA for close engagement over the past 4 years, since he stepped into the Treasury portfolio in the Opposition.
• The Minister confirmed that work started in the last government on the Consumer Data Right and payments will continue.
• In terms of vulnerable consumers, the Government is concerned about: serviceability for people who came in at the top of the market (and wages not keeping pace); less concerned about negative equity; concerned about those consumers that will move from a fixed interest rate into a much higher SVR environment.
• The Minister emphasised that AFIA members, as participants in the credit market, should deal with their customers fairly and with compassion (forbearance and understanding) and with understanding that we will see current challenges (e.g. inflation) probably well into next year before economic circumstances turn around.  
• In terms of payments and credit, the Government will shortly have a roadmap to talk to the industry and noted the importance of having certainty about the order of reform.
• With credit and BNPL, the Government is currently undertaking targeted consultation and expects a consultation paper to be released in the very near future around future regulatory settings. He noted that it was healthy for products to compete and grow, but need appropriate and analogous regulation since achieving maturity.
• With the consumer data right, the Minister said he was a fan and saw enormous benefits to the economy, although acknowledging that this was not something that consumers have quite got their heads around as yet. He highlighted that consumers should be able to use their own data to their own benefit, citing benefits such as cheaper home loans and more appropriately focused and targeted credit. He also noted that real benefits won't be achieved until CDR breaks out of the silo of one industry.
• The Minister was generous with his time in Q&A, including noting the important role of AFIA in self-regulation through codes, but that it was the Government’s role to regulate for areas which could not be achieved through self-regulation, including for competition and a level playing field.
• The Minister also noted that certain participants in the financial system who were not regulated, including in payments (e.g. digital wallets, although this was not said explicitly), should be regulated if they are providing services akin to financial services.

Lisa Shtalekar, former captain of Australia’s international women’s cricket team

Lisa Shtaleka, former captain of Australia’s international women’s cricket team and first woman in history to hold the position of President of the Federation of International Cricketers Association gave an inspiring talk on leading in a different way. She discussed mastering leadership on and off the field, how leadership in sports translates to the wider world, and her influence on the women’s game and her ability to rise up from adversity.

A key message was that change is never in a straight line and we need to keep our eyes open for the building blocks of change, and take advantage of those moments.

The AI Playbook panel session

Facilitator: Anna Fitzgerald, Executive Director Communications and Strategy, AFIA.
Panel: Therese McCarthy Hockey, Executive Director Banking at APRA. Shai Haim, Chief Technology Officer at Prospa. Soumith Rao, FSI CTO at Microsoft.

This panel session explored the way in which artificial intelligence (AI) has revolutionised the finance industry, including streamlining processes ranging from credit decisions to fraud and financial risk management, and is creating new ways to meet customer demand for smarter, safer and more convenient ways to access, spend, save and invest.

Discussion topics: value of AI in loan origination, credit risk management, fraud protection, and marketing, challenge in use of risk proxies, responsible use of AI and data ethics, challenge of the regulatory reform agenda and capacity for AI investment, and the importance of trust and transparency.

 The Reimagining Money panel session

Facilitator: Roza Lozusic, Executive Director Policy and Strategy, AFIA.
Panel: Dr Scott Farrell, Chair of the Treasury Review into the Australian Payments System. Dr Christian Westerlind Wigstrom, Co-Founder and CEO of Monoova.

This panel session explored the concept of money and how it has evolved over time. Cash has given way to crypto and the central role that trust plays in the exchange of money. Discussion topics: information (data) and money two sides of the same coin, trust and technology and the evolution of exchange of value, monetisation of data and data being like ‘uranium’.

The Hon Stuart Robert MP, Shadow Assistant Treasurer and Minister for Financial Services

• The Shadow Assistant Treasurer and Minister for Financial Services gave a broad ranging speech on a time for everything.
• He outlined his views on the need for further rationalisation and professionalisation of peak industry bodies in the financial services sector – noting the proliferation over time.
• He considered that peak bodies should be akin to self-regulating entities, managing not only industry standards, but also professional standards, training and accreditation. He noted the work of AFIA in advocacy and industry standards and the value of AFIA’s diverse membership working together.
• Further that Government should step back and get out of the way and let industry step forward to lead in these areas – that the time was for industry to ‘self-regulate from below’.
• However, to achieve self-regulation, the industry must not be divided – rationalisation is crucial as you cannot be authority in industry where industry is divided.
• The Shadow Minister outlined ten areas that should be the focus of industry associations that allows government confidence to step back and permit self-regulation:

1. Minimum education qualifications – like accountants
2. Recognise foreign qualifications and do it fast
3. Accreditation – approval to practice
4. CPD – what it looks like and how much needed, consistency
5. Complaints – deal with them
6. Dispute resolution
7. Discipline
8. Codes of practice and ethics
9. Recognise who is doing good
10. Knowledge based and best practice

• The Shadow Minister emphasised focus on the customer, with the customer at the centre and the customer experience central to the industry practices and standards guiding the design and development of products, services and technologies.
• Financial firms must tell the truth about performance and consequences.
• Finally, he finished with three themes: be open; be responsive and be competitive.

The Redefining Relationships in the Digital World panel session

Facilitator: Cameron Poolman, CEO Ondeck.
Panel: Suanne Russell, Lead Ombudsman Small Business and Transactions, AFCA. Liza Frazier, COO, Judo Bank.

This panel session explored the fast-growing SME sector, which is critical to the growth of the Australian economy and the role that the financial services sector can play to supporting SMEs. It outlined the challenges facing the SME sector post COVID-19, including supply chains, staff shortages, and a raft of obstacles to accessing funds.

Discussion points: AFCA complaints providing indications of where industry needs to improve their practices, challenge of dispute resolution for SMEs, particularly given AFCA membership is voluntary, the role of AFIA’s OSBL Code of Practice, resolution times for complaints and factors leading to long timeframes, and difficulties encountered by SMEs to obtain credit and the benefits of innovative products and cashflow tools.

Think Differently Gus Balbotin, Former Executive at Lonely Planet and alternative futurist

By the age of 22, Gus had dropped out of university, hitchhiked South America, set up his first business and landed his dream job at Lonely Planet.  Fast forward a few years and he was leading the company globally working with companies such as Google X, Nokia and Amazon on the latest technology, creative cultures and high-performing teams.

In a very high energy session, Gus gave advice on how to think differently, and a key message was that we should individually be adaptable. A technique to be prepared to adapt is endeavor to do something novel, so that we can continue to learn and see and experience things differently, so this opens our minds to thinking differently and move quickly.