The Australian Government released the Final Report of the Productivity Commission Inquiry, Competition in the Australian Financial System in August 2018
The Report considers and makes recommendations on a wide variety of payment issues – including interchange fees, merchant routing for dual-network cards and reviewing the regulation of purchased payment facilities
While the Government has not issued a formal response, many of the proposed Recommendations related to payments continue to progress.
Point of View
The Government has still to formally respond to the Productivity Commission (PC) Inquiry, Competition in the Australian Financial System. As with other PC reports, including the superannuation industry, the Government had indicated that it would wait on the release of the Final Report of the Royal Commission into Banking, Superannuation and Financial Services (FSRC), before responding. This rationale being that both have at their core a desire to improve consumer outcomes. However, whilst the government in its response to the FSRC did indeed cover some of the superannuation recommendations, it did not respond to the PC Report into competition.
Despite this delay, many of the proposed recommendations that apply to the payments industry continue to be progressed by the various regulatory bodies responsible for them. However, the progress that can be made[VR1] on some of these recommendations is potentially limited by the[VR2] eventual need for legislation in some areas. Although this could also give industry scope to get ahead of this process by regulating itself.
The ongoing delay in responding to the PC Report may also have implications for the triennial reviews of competition in the financial sector, which was one of the recommendations from the Murray 2014 Financial Services Inquiry (FSI). The PC inquiry subsequently commenced in the 2017, which would mean the next review would likely be scheduled for 2020. This seems unlikely, and maybe reconsidered, instead moving to five-yearly intervals (mirroring card payments regulation undertaken by the RBA).
The status of work being undertaken on the payments related recommendations is as follows: