Shaping the Future
The Hon. Stephen Jones MP, Assistant Treasurer & Minister for Financial Services
The Minister said AFIA has provided sensational engagement since opposition and now in Government.
The Government has put consumer affairs and rights back at the centre of economic policy. Ensuring consumers have trust in digital economy so they can get ahead.
Far from being a dirty word, credit is actually essential to consumer outcomes.
Well-functioning credit markets are crucial to economic growth and helping people reaching their aspirations.
BNPL
Noted it was good news that BNPL legislation has passed parliament.
Noted that 7 million Australians with BNPL accounts. It is an Australian innovation providing good competitive pressure to low-cost credit products. As a result, costs have come down for consumers.
But there are risks to consumers. It will be regulated in scalable way.
The Government wanted to make sure it was pragmatic and rejected the extreme positions that were put to government.
Innovation doesn’t mean consumer protection is disregarded. Proportionate guardrails have been put in place.
The new regulatory definition – low-cost credit - will cover most BNPL products. Subject to modified RLOs, the regulatory impact will scale down up or down with the risk of the product.
Cyber-risk
The great risk all businesses must lean into. Government is particularly focused on the retail end.
The digital economy has allowed scams and fraud to be industrialised. The government response is important to restore trust in the digital economy.
Most people don’t answer the phone if they get a call from an unrecognised number. Most businesses would have a call centre. Consumers won’t pick phone up because they can’t be confident it won’t be an overseas based scam. If they can have confidences in texts or calls, they won’t respond.
It is not just consumer problem; it is a problem for how Australians do business.
Scams would’ve reached $24bn in losses by end of next year if we had continued along the previous approach on scams. The National Anti-Scams Centre is currently blocking millions of scams.
Next phase of government approach is the Scams Prevention Framework through parliament, putting requirements on businesses.
National Anti-Scams Centre reported last week that for the first time scams are going down (by 41%). Australia is the only country in the world going in this direction.
CDR
The CDR is a great idea, but it was not well implemented. It was too complex, and too many products were in scope which would never be subject to a customer data request.
The Government wants to see it work and to make sure it doesn’t just stop at bank sector but expands into NBL sector.
Government acknowledges the regulatory burden, but the proposal released by Treasury last week has reduced that considerably. The NBL sector has great capacity to use CDR, to provide competition to major banks.
Initiatives in the short term
Regulatory Grid may or may not come before Christmas. Each regulator thinks they’re the only dogs in the park, but there’s a whole lot of other regulatory initiatives going on.
Small and Medium Banks review - there is a social compact between government, business and broader population. That is strained by periods of enormous change. In other parts of the country, a significant portion of people are wedded to cash and want to speak to a person at a bank branch or over the phone.
This will require the economy sharing the burden more than it is at the moment. Access to cash, services, and NBL are all part of this. There is a need to bring all Australians along the transition to digitisation.
There is a need to manage this to ensure these services continue to exist across country.