Page 4645 - Week 15 - Wednesday, 15 December 1993
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I think I have said to members on other such occasions that it is the Commonwealth which has the major role in relation to the regulation of banking practices. The Reserve Bank of Australia is responsible for regulating banks under the Banking Act of 1959. The overall objective of that regulation of banks is depositor protection, and the Reserve Bank sets prudential standards, that is, levels of capital and liquidity, and it monitors compliance with those standards. So there is a regulatory regime in place. The Reserve Bank also sets the official cash rate and the interest rate for financing transactions between the banks and the Reserve Bank. Although these rates affect the mortgage and business lending rates offered by the banks, the RBA does not control the rates set by banks. They are set by competitive pressure between the banks in the marketplace in accordance with the lending policy and the business profile of each bank.
Mr Deputy Speaker, the State banks could remain outside RBA supervision, but all States have elected to come under the RBA. In some cases this is voluntary, but they are all under that regulatory regime. Since its corporatisation the State Bank of New South Wales has been directly under the Reserve Bank of Australia. Credit provision by banks to consumers, especially the disclosure and enforcement of loan conditions, is regulated under the Credit Act of each State or Territory. Consumer complaints can be lodged with Consumer Affairs, the banking cmbudsman or the Reserve Bank of Australia.
The Commonwealth, supported by Territory and State governments, has been taking a very close interest in the conduct of the financial sector and the Commonwealth has formed a task force comprising the Trade Practices Commission, the Federal Bureau of Consumer Affairs and the Federal Treasury to develop an industry code of practice. The Australian Bankers Association, however, has proceeded to introduce its own code of practice. The Attorney-General, my colleague Mr Connolly, has expressed concerns in recent times over inadequacies in the bankers code and he is seeking improvement, particularly in the areas of privacy and confidentiality. Mr Connolly is pursuing this matter directly with the Australian Bankers Association and I think it is fair to say that he is taking the national lead on this issue. He will speak on this matter, I believe.
One further matter I would like to touch on, Mr Deputy Speaker, is the selection of the State Bank as the ACT's banker. This came about as a result of the four-year banking contract with Westpac expiring on 30 June of this year. Tenders were sought from financial institutions with a presence in the ACT. They were issued on 8 March 1993 to 11 organisations and they were to respond by 1 April. Three organisations declined to tender. Tenders which were received were evaluated by a team of Treasury officers assisted by the consulting firm of Ernst and Young. The evaluation criteria that we used in this tender evaluation included the strength and the quality of services tendered, the presence of service outlets within the ACT, and the net cost to the Government.
As a result of this process the State Bank of New South Wales was appointed on 26 May as the Government's banker, and operations commenced on 1 July. The hand-over between Westpac and the State Bank was very well managed and I think we owe a debt of gratitude to both of them for handling what could have been a very difficult situation. Although the New South Wales Government is proceeding with the sale of the bank, the Territory has received assurance that the contracted services will be maintained. The sale of it should not make any difference to the service that we receive in regard to Territory banking from the State Bank.
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