In the past 12 months there have been a number of significant developments in the banking, investment and insurance industries. Key developments include the proposed regulation of cryptocurrency and the Buy Now Pay Later Industry, the Reserve Bank of Australia’s research project into uses cases for introducing a Central Bank Digital Currency (CBDC) and the increasing relevance of climate change risks in the banking and finance industry.
Regulation of Cryptocurrency
On 20 October 2021, the Senate released its Select Committee on Australia as a Technology and Financial Centre Report. Key recommendations included:
A) establishing a financial markets licensing regime for digital currency exchange providers and implementing rules for custody of such digital assets; and
B) undertaking a token mapping exercise to classify the various types of crypto-asset token and other digital assets, which may result in such tokens being characterised as financial products and therefore subject to the Australian financial services licensing regime.
The new Labor government has committed to implementing the recommendations and has announced a token mapping exercise that is intended to be conducted before the end of 2022.
Buy Now Pay Later Regulation
There is a voluntary Buy Now Pay Later Code of Practice in place but currently, there is no mandatory regulation of the sector. However, in June 2022, Minister for Financial Services, Stephen Jones, announced that BNPL products will be regulated under the National Consumer Credit Protection Act 2009 (Cth) (NCCP Act). Regulations are expected to be introduced by mid 2023.
Reserve Bank of Australia’s Central Bank Digital Currency
The Reserve Bank of Australia is actively researching use cases for introducing a CBDC. A CBDC can most easily be understood as a digital form of cash. The unit of account would be the national currency, and it could be exchanged at parity (i.e. one for one) with other forms of money, such as physical currency or electronic deposits with well-regulated financial institutions.
Since 1 July 2020, Australia’s bank customers can give permission to accredited third parties to access their savings and credit card data. Since 1 November 2020, they can also give permission to accredited third parties to access mortgage, personal loan and joint bank account data. This will enable bank customers to search for a better deal on banking products or to keep track of their banking in one place.
Climate Change Risk
The issue of climate change has prompted the banking and financial services industry to explore more proactive approaches to managing and disclosing climate related risks. Discussions around reforms have been engendered by increased concerns over the potential liability of company directors for failing to disclose climate-related risks or declaring green goals while in reality lacking credible plans to actually achieve them.
Drawing on her technical knowledge and experience, Andrea has the ability to assist customers to not only adapt but leverage regulatory reforms and industry developments.