Government backs most recommendations from small and medium bank competition review
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The news: The Albanese government has accepted in-principle eight of nine recommendations made by the Council of Financial Regulators’ (CFR) review into small and medium-sized bank competition and has welcomed actions for regulators.
The context: Treasurer Jim Chalmers said in a statement that the government would consult further on the final recommendation for the Australian Prudential Regulation Authority to “introduce a lighter touch framework for very small banks, accompanied by adjustments to the Financial Claims Scheme”.
Among the recommendations that the federal government has given in-principle support for are the removal of requirements for small banks to automatically report certain breaches to financial regulator ASIC and replacing the annual compliance certificate process with a simpler ‘responsible manager’ form.
Other recommendations that have received in-principle support include considering an increase to the amount of Australian assets that can be committed to covered bond cover pools from 8% to 12% and expanding the use of a streamlined test for Financial Sector (Shareholdings) Act approvals for bank startups.
The review, launched in June 2024, was led by the CFR in close consultation with the Australian Competition and Consumer Commission. It received 27 submissions.
Chalmers said the government would continue working with the two bodies on the recommendations and proposed actions, “including through further targeted consultation”.
The source: Review into Small and Medium-sized Banks report
