A royal commission into banking and financial services would examine potential changes to Australia’s regulatory architecture, not just scrutinise poor behaviour, shadow treasurer Chris Bowen said.
Speaking at the Financial Services Council Leaders Summit in Sydney, Bowen said high household debt, the “ad-hoc” nature of regulation and the emergence of fintech all make it necessary to broaden the terms of reference of the proposed royal commission.
The new banking and accountability reform package has blurred the lines between the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission, Bowen said, which means “a stocktake is warranted”.
However, he confirmed to FSC chief executive Sally Loane he was not proposing removing the twin-peaks regulatory system.
“The benefit of having two regulators is they both do their jobs well…My concern is that the lines are becoming more blurred,” he said.
Unlike previous changes to regulation that have followed government and independent inquiries, recent changes have been “ad-hoc”, Bowen said. He cited the increases to regulatory powers in the budget as an example.
In relation to fintech, Bowen said Blockchain could not even have been considered at the time of the Wallis Inquiry and the rapid emergence of new technology makes it necessary to reconsider regulation.
He said regulators could use fintech in the future but a systematic review is necessary first.
“A royal commission is a very serious opportunity to examine very complex matters,” he said.
When Loane asked whether a royal commission would be “cracking a nut with a sledgehammer” and could be revisited as a Labor policy between now and the federal election, Bowen said the proposed commission was a “very clear policy” that the Australian Labor Party would face the election with.
He said the recent budget reforms, especially the banking and accountability package, were spurred by Labor’s call for a royal commission.
