When the Australian Parliament sits tomorrow for its first session of the year it will have three important financial services bills to consider – one making changes to the Reserve Bank, one introducing a national shared equity scheme and one expanding the Consumer Data Right.
The government will be hoping to see Treasury Laws Amendment (Reserve Bank Reforms) Bill 2023 passed quickly to conclude its changes to the RBA’s structure and operations. And it will also be keen to see Help to Buy Bill 2023 passed to get some momentum into its housing program.
On the other hand, Treasury Laws Amendment (Consumer Data Right) Bill 2022 has been on the backburner since last February, when it was passed by the House of Representatives, and it might stay there. The industry is keen to see action initiation added to the CDR, but the government wants to fix some of CDR’s problems before it expands the system further.
Reserve Bank restructure. Treasury Laws Amendment (Reserve Bank Reforms) Bill 2023 sets out a new structure to replace the existing RBA board with a monetary policy board and governance board, as recommended by the RBA Review.
The review recommended that the monetary policy board should have more members with “deep formal expertise on economic and financial system matters”.
Six external board members will be appointed by the Treasury. They will make up the majority, alongside the RBA governor and deputy governor and the Secretary of the Treasury.
Other changes in the bill include a provision that the government cannot override RBA monetary policy decisions and a provision that the RBA does not have the power to determine the lending policies of private banks.
The amendment bill was introduced in November and has yet to be voted on.
Help to Buy. In November, the government introduced a bill in the House of Representatives to establish a national shared equity scheme for low and middle income earners looking to buy a home.
Under the program, Housing Australia will administer the scheme, providing eligible participants with a commonwealth equity contribution of up to 30 per cent of the purchase price of an existing home and 40 per cent of a new home.
Homebuyers will need a minimum 2 per cent deposit to participate and will qualify for a standard home loan (with no LMI). The equity contribution means that borrowers’ monthly repayments will be lower.
Minister for Housing Julie Collins said the scheme would make a home purchase affordable for around 40,000 households. Participation will be capped at 10,000 a year.
All states have agreed to introduce legislation so that the scheme can operate nationally. The territories will participate in the scheme from commencement.
Consumer Data Right. Treasury Laws Amendment (Consumer Data Right) Bill 2022, which adds action initiation to the CDR rules, was passed by the House of Representatives last February but has been held up in the Senate since then.
Action initiation through CDR allows a consumer to consent to an “accredited action initiator” initiating actions beyond requests for data sharing. This could involve “action service providers” switching accounts or products, making payments or updating contact details across multiple accounts on a consumer’s behalf.
The addition of action initiation to the CDR was the key recommendation of the 2021 Inquiry into Future Directions for the Consumer Data Right. It has been at the top of the wish list of industry participants since CDR was launched.
The explanatory memorandum accompanying the bill says the Minister will declare the types of actions that can be initiated under CDR and the data holders that are to be action service providers. The Minister will also have power to determine whether fees can be charged for action initiation services.
Accredited action initiators will be accredited by the ACCC and will need to be accredited data recipients. Action services providers would be existing data holders. For payment initiation, authorised deposit-taking institutions will be the class of data holders that will become action service providers for variable recurring payments.
It is possible the government will keep the bill on the backburner. Last year, it accepted the recommendations of a CDR review that called for the rollout of the system to be put on hold while steps are taken to improve data quality and security, and increase awareness and take-up.