Policy Update - July #1

Government responds to CFR de-banking recommendations

Last week the Government released its long-awaited response to the Council of Financial Regulators' report on Potential Policy Responses to De-banking in Australia.

The Government's response:

• Agrees to work with the major banks to ensure there is more data collection and reporting on de-banking;

• Supports in principle the transparency and fairness measures to ensure banks document and communicate their reasons for de-banking;

• Supports in principle the major banks providing more guidance and publishing information on their requirements and risk tolerance; and

• Notes a recommendation to provide fintechs with funding for capability uplift.

While these developments are welcome, these measures are the bare minimum and we are disappointed it took almost 10 months for the Government to respond to these relatively modest proposals.

We also note many of the outcomes rely on the banks taking voluntary action and the measures focus on future de-banking, offering little recourse for the many fintechs already de-banked or any prospect of being re-banked.

FinTech Australia has been a longtime advocate regarding the vast impact of de-banking and made multiple submissions in relation to this process, including at several Parliamentary committee hearings.

Consultation on climate-related financial disclosures

The Government has released a consultation paper on Climate-Related Financial Disclosure.

This process represents progress towards introducing standardised, internationally-aligned reporting requirements for businesses to make disclosures regarding governance, strategy, risk management, targets and metrics in relation to climate related plans, financial risks, and opportunities.

The proposed implementation of these climate disclosure requirements will be staggered, with large entities (i.e. Chapter 2M entities) required to start reporting first. 

Due to this initial focus on larger entities, FinTech Australia does not propose making a submission at this stage of consultation. Please reach out if you are interested in this process or making your own submission.

Startup Year legislation passes

Earlier last week, the Government passed legislation to implement the new Startup Year scheme. This new Startup Year HELP loan aims to assist eligible students to participate in accelerator program courses at Australian universities. 

FinTech Australia previously made a submission in support of the scheme and proposed keeping the initiative's selection criteria broad to ensure fintech startups can be eligible. We look forward to the forthcoming Guidelines which will provide more detail on eligibility criteria for accelerator programs.

RBA consults on default routing and tokenisation of debit cards

The Reserve Bank of Australia has released an Issues Paper on options for enhancing the competitiveness, efficiency and safety of Australia’s debit card market.

The paper covers two key issues: 

• the practice of a default routing network being set at issuance on dual-network debit cards; and

• the tokenisation of debit cards for the purpose of conducting online transactions.