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2013/SOM1/EC/WKSP/010

Session 5

Australia - Draft 2013 ANSSR Mid-Term Progress Report

Submitted by: Australia

/ Macro APEC New Strategy for Structural Reform Workshop: Mid-Term Progress in Implementing ANSSR
Jakarta, Indonesia
30-31 January 2013

Australia

DRAFT 2013 ANSSR Mid-Term Progress Report

Introduction

On 12 December 2010, the Australian Government announced itsCompetitive and Sustainable Banking System reforms. The reforms were developed in response to increased public concern that the banking system had become more concentrated following the global financial crisis.

The reformsfocus on three broad areas: empowering consumers so they can get a better deal in the banking system; supporting smaller lenders so they can put more competitive pressure on the big banks, and securing the long-term safety and sustainability of the Australian financial system.

ANSSR PrioritiesImplementation

Promoting better functioning and effectively regulated financial markets
Priority
Progress in 2011-2013 / Empower consumers to get a better deal
•Exit fees for new home loans are now prohibited tomake it easier for people to transfer mortgages to other lenders.
•The Government made it easier for customers to switch deposit accounts to another bank by removing the burden of changing automatic debit and credit details.
•Banks must now provide a simple one-page fact sheet with a standard layout to help consumers compare home loans.
•Anti-competitive price signalling by banks is now prohibited.
•Credit card reforms are in place. Consumers have more control over the amounts they borrow, and lenders are prohibitedfrom practices that see consumers being charged more than they should.
•The communityawareness and educationcampaign has launched via television, radio, print and online.
•Since the reforms were announced, competition in the mortgage market has intensified: lenders are offering cash incentives to switch and waiving fees; new entrants have emerged; refinancing activity has increased 25%;and, smaller lenders are marketing more aggressively.
Support smaller lenders to compete with big banks
•The Government has confirmed the deposit guarantee is permanent, helping secure deposit funding which smaller lenders rely on.
•Smaller lenders grew their business at almost three-times the rate of the major banks.
•The Government has increased its investment in smaller lenders’ securities.The residential mortgage-backed securitiesmarket is recovering with less call on Government investment.
Secure the long-term safety and sustainability of the financial system
•Banks, credit unions and building societies are now allowed to issue covered bonds - a low cost, stable and diversified source of funding. Australian banks have issued around A$44 billion in covered bonds.
Future plans for implementation / Secure the long-term safety and sustainability of the financial system
•The Government is preparing to list retail Government bonds on a retail exchange in early 2013.Retail trading will provide issuers with a more visible pricing benchmark and create retail investor interest in debt markets. Draft legislation has been released for consultation.
•Treasury is aiming to introduce legislation on reducing red tape associated with corporate bond issuance in mid-2013.