Government regulation imposed on Australia’s banking, wealth management and superannuation sector has greater power to disrupt the industry than organic innovation, according to senior industry figure and company chairman Don Sharp.
The former co-founder of financial advice business Bridges Financial Services Pty Ltd and former chairman of fund manager Investors Mutual Limited, Mr Sharp, said the greatest innovations over several decades have not come from within the industry.
“They have been imposed from Government,” he said.
“Ours is a reactive industry, prone to the continual winds of political and policy change from Canberra,” Mr Sharp said.
“Against this constant legislative and regulatory buffering, it remains challenging for the industry to properly invest and develop true innovation that drives stable, long-term positive change for the end consumer and the economy.”
Mr Sharp praised the level of effort being mounted by the fledgling financial technology (FinTech) sector and the assistance of the corporate regulator ASIC in providing ‘sandbox’ relief to start-up digital technologies.
“These are positive measures. But my hesitation with endorsing most endeavours is in knowing what it takes from a financial and personal point of view to take a good idea, develop it into a business and then deliver a sustainable, long-term commercial proposition in a changing market.
“The task of building a successful business is challenging at the best of times, but add legislative change and it becomes almost impossible.
“Even today, having finalised the federal election result in Australia, we see lingering political uncertainty over the Coalition Government’s superannuation taxation policy. Our industry is obligated to meet whatever shifts are made by Government – and fund a response to those shifts – whilst also minimising downside risk to the customer or fund member,” he said.
Mr Sharp said the upcoming New Payments Platform, an initiative of the Reserve Bank of Australia to influence real-time payments in the banking sector, is another example of disruptive regulation.
The Australian Taxation Office has also slated changes in 2017 to the payment of Australian wages, called the Single Touch Payroll (STP) initiative.
STP also has the potential for profound impact on the superannuation sector, as the way wages are paid from July 1 next year becomes more efficient and transparent, with flow-on effects for the payment of Superannuation Guarantee payments.
“My advice to the FinTech entrepreneurs is to build for known regulatory events, and remain flexible enough to accommodate the inevitable rollercoaster of ongoing regulatory change.
“I also implore the policy makers to cast their gaze at longer horizons, avoiding the short-term fix mentality that has largely characterised the oversight of the financial services industry,” he said.
Source: Integrated Payment Technology
