Government to introduce ‘regulatory grid’

The federal Treasurer Jim Chalmers and Assistant Treasurer and Minister for Financial Services Stephen Jones MP have announced that the federal government will soon introduce a financial sector regulatory initiatives grid to “make sure the standard business of regulation is carried out in a more coordinated way”.

The regulatory grid – modelled on a similar grid already used in the UK – aims to provide a coordinated and consolidated presentation of the expected time frames of regulatory initiatives that impact the banking, credit, insurance, superannuation, investment, payments, and capital market sectors.

The grid seeks to “make sure the standard business of regulation is carried out in a more coordinated way” (for example, by avoiding regulation duplication and helping regulators identify shared strategic priorities) and help financial services businesses have a better overview of the regulatory roadmap.

Produced twice a year, the grid will provide a rolling, 24-month forward program of regulatory initiatives from the Australian Securities and Investments Commission (ASIC), the Australian Prudential Regulatory Agency (APRA), the Australian Competition and Consumer Commission (ACCC), the Reserve Bank of Australia (RBA), and the Australian Taxation Office (ATO).

By giving financial services providers better visibility of the regulation that may impact their businesses, it is hoped that businesses of all sizes will be able to allocate their resources more efficiently when implementing regulation, thereby reducing the compliance burden and its associated costs, and promoting more engagement with proposed reforms and their implementation.

The grid will be established and administered by Treasury and include proposed legislation, rules, regulation, and standard making; consultation processes,;and data collection processes.

It is expected that the grid will follow a similar format to the UK grid, which is organised by sector and also includes a multisector overview to show which initiatives span more than one sector.

The government has not yet revealed when the grid is expected to be released.

Announcing the new grid on Monday (11 March), the Treasurer and Assistant Treasurer said: “We want to make it simpler and easier to do business in Australia and that’s what this will help achieve in the financial services sector.

“By engaging with industry, we believe we get better outcomes and that’s what this is all about – promoting transparency, collaboration and engagement with the private sector is an important part of our economy.

“Treasury will continue to engage with financial sector stakeholders in the development of the grid.”

Several banking associations have been working with Treasury on the reform, with the Customer Owned Banking Association (CBOA) and Australian Banking Association (ABA) both welcoming the new grid.

ABA chief executive Anna Bligh said: “With almost 1,200 pages of new laws and regulations placed on the banking sector in the past four years, any initiatives that will allow banks to better plan and coordinate future regulation is welcome.

“The industry has been calling for a regulatory roadmap for some time and we welcome the Federal Government’s recognition of a pathway forward.

“Being able to better navigate regulatory reform will allow banks to reduce compliance costs and invest more in areas such as innovation and new technology.”

Bligh suggested that the grid would also benefit competition in the banking industry as it would provide “mid-tier banks” with better visibility of regulatory change, “enabling them to better plan and allocate resources more effectively.”

“We’ve seen a similar initiative in the UK deliver productivity gains and more innovation, and now the same will be able to be achieved here in Australia,” she said.

​Similarly, COBA CEO Mike Lawrence said the new grid would “allow customer-owned banks to better forecast staffing and resource requirements, plan for regulatory change, and better compete with larger banks”.

“The relatively small size of some customer-owned banks compared to their shareholder-owned counterparts makes it harder to keep up with the tsunami of regulatory change we are seeing in the financial services sector. This impacts their ability to compete and is key to why we have been advocating for this initiative for a number of years,” he said.

Lawrence suggested that the grid came at an opportune time, given the fact that “significant regulatory change will continue as the risk environment becomes more complex and dynamic”.

“The introduction of a regulatory grid means better coordination and mapping of regulation, which will help banks and credit unions manage this burden and maintain critical investments in customer-focused initiatives,” he said.

“We look forward to working with the government on the design to make sure that the regulatory grid delivers productivity, transparency, and accountability benefits.”

[Related: Treasury urged to prioritise regulatory road map: COBA]