Page 996 - Week 04 - Wednesday, 31 March 1993
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A great many credit transactions and financing transactions are, of course, made through building societies and credit unions. Those institutions are under the control of the Australian Financial Institutions Commission, which I have reported to this Assembly about on previous occasions. The AFIC sets prudential standards for all States and Territories, and they base those on the RBA standards. To monitor compliance with those standards, each State has a supervisory authority. In the ACT it is the Registrar of Financial Institutions. In most States, including the ACT, building societies and credit unions are currently exempt from certain credit Act provisions relating to the disclosure and enforcement of loan conditions. This exemption will be removed when the uniform credit legislation is implemented - another good reason for that uniform legislation. Consumer complaints about non-bank financial institutions in relation to credit provision can be lodged with Consumer Affairs or with the State supervisory authorities. In the ACT complaints about a non-bank financial institution should be lodged with the Registrar of Financial Institutions.
Madam Speaker, I think there is widespread recognition that the banks need to lift their game in relation to their customers. This is a matter that was taken up at some length by the Prime Minister, Mr Keating, in his statement on 9 February 1993, when he launched "Investing in the Nation". I will quote from the Prime Minister's comments. He said:
... we need a culture which lays more stress on establishing close relationships between banks and their customers.
I encourage the banks to provide extra training for staff so they can better evaluate the risk and potential of proposals; and to be much more prepared to lend on cash flow.
If we are to develop and expand innovative small and medium business in Australia, this sort of closer relationship banking is essential.
He also said:
In future, to ensure that our banking system is working effectively, under a Labor Government the Reserve Bank will establish the machinery to regularly monitor the conduct and patterns of bank lending.
In addition, the Reserve Bank will conduct quarterly surveys of small businesses to establish a better understanding of their relationships with banks.
To provide the RBA with more detailed information and advice, the Reserve Bank will also establish a large and representative Advisory Council whose members will be principals of small and medium businesses.
To encourage banks to establish the appropriate structures and to increase the lending to small and medium business, the Reserve Bank will pay market interest rates on bank deposits it holds, thereby increasing the revenue of banks by about $140 million.
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