The power of three

By Ben McAlary

Strength, accountability and competitiveness. Those were the guiding principles the Federal Treasurer said were being pursued by the Government when he addressed an audience of industry professionals at the penultimate Financial Services Council and BT Political Series event for the year.

The Hon Scott Morrison said, “Improving the quality of the financial services system and ensuring it is providing stability to the sector and our wider economy, as well as serving its customers well… is my most important responsibility.”

“Major changes are coming”, the Treasurer continued, “whether we like it or not.”

Better days ahead

Addressing a full house in Sydney the federal Treasurer highlighted the sentiment and turnaround of the global economy that has the IMF, OECD, World Bank and APEC all in agreement about the 'cautious optimism’ of the current environment.

Closer to home, the Treasurer underlined the bigger than anticipated 2% increase in GDP for 2016/17 coupled with the strongest annual full-time job growth in 40 years, has meant that the “clouds were starting to part for our economy.” While on wages he believed growth was imminent and would “improve in-line with productivity”.

Strength

Mr Morrison explained Australia’s experience of comparative strength during and after the 2008 financial crisis was in large part due to the astute regulatory management of the Liberal party’s longest serving treasurer, Peter Costello.

Looking to build on Costello’s legacy and continue to future proof the regulatory environment, the federal Treasurer emphasised the proposed enhanced powers for the financial regulator - APRA.

“We are building on our legacy of regulatory resilience by enhancing APRA crisis management powers, as recommended by the Murray enquiry, for APRA to have prudential standards for resolution as well as expanded powers through a crisis management toolkit to assist failing banks or insurers,” he said.

APRA will also be given 'reserve’ power over lending activities of non-banks although The Hon Morrison cautioned it as a 'last resort power but critical for APRA if needed to step in.’

Accountability

On the issue of accountability the federal Treasurer underscored the federal Government’s new Banking Executive Accountability Regime (BEAR).

“Bank lenders will be held to account including new rules around transparency, responsibility and consequence,” he said, emphasising tougher penalities for executives including disqualification and loss of bonuses.

“This is legislation with teeth,” the federal Treasurer added.

Competition

Leaving his most passionate subject for last, the Treasurer spoke enthusiastically about the role of Fintech in Australia’s financial services sector.

“Fintech is no longer a disruptor…. it is now a collaboration with the formal financial system.”

The Treasurer mentioned that Sydney is ranked eighth out of 180 cities when it comes to fintech, while other industries across the country are transforming the way they operate thanks to the burgeoning sector.

The Treasurer outlined a number of announcements including the world first ASX blockchain settlement house, real time payments platform and the world’s most forward leading regulatory sandbox for fintech as examples of innovation within the sector.

Pleasingly, the Treasurer reiterated the unquestionably strong, stable and accountable nature of Australia’s financial services system underlining the importance it has for the 13 million Australians who are reliant on the sector to, “enable some of the most important decisions in life,” while also ensuring the stability of our national economy.