Three of Australia's big four banks have given their 'in principle' support for the creation of an ASIC product intervention power – albeit with a long list of exemptions.
The submissions of ANZ, Westpac and NAB regarding a Treasury paper about ASIC's proposed product intervention powers have been made public as part of an ongoing parliamentary review of the four major banks.
The product intervention powers for ASIC were recommended by David Murray's Financial System Inquiry in 2014 and subsequently adopted by the Turnbull government.
ASIC chairman Greg Medcraft has made a strong case for the new powers in order to address the "bank oligopoly" in Australia.
Westpac's submission to Treasury said the new powers should be framed in legislation "only to be used where there are gaps in existing powers or where it would be impractical for ASIC to use an existing power".
As suggested in Treasury's proposal paper, the product intervention power should be a "power of last resort", said the Westpac submission.
Westpac also had a long wishlist of products that the bank felt should be excluded from the proposed ASIC powers, including superannuation, basic banking products, foreign exchange products, listed instruments (specifically, hybrid securities), corporate bonds, margin lending and platforms.
In general, Westpac was concerned that the new ASIC powers could "unnecessarily create overlaps or duplications with existing regimes".
NAB's submission gave "in principle" support for the product intervention powers, but also laid out a number of "practical issues and limitations" that "need to be addressed".
"NAB’s view is that the ASIC’s remit be formulated as a precise list of potential interventions the power would allow, consistent with the FSI report," said the submission.
"This would provide greater certainty for industry about the nature and extent of the proposed power, without detracting from ASIC’s ability to intervene to address the risk of significant consumer detriment."
Like Westpac, NAB argued that listed instruments such as hybrid securities be excluded from the new powers along with margin lending and superannuation products.
ANZ – which is looking to sell its product manufacturing business – was more forthcoming in its support for the ASIC product intervention powers.
While the ANZ submission raised similar concerns about listed products such as hybrids, the bank said it "supports measures which allow ASIC to be a stronger regulator within the context of a well-functioning market for financial services".
"We believe the proposed types of interventions are appropriate," said ANZ. "The intervention power is a strong measure and the need for its use should be carefully established, including through robust evidence, prior to exercise."
The Australian Bankers' Association (ABA) said it "believes the product intervention power should apply to all financial products made available to retail clients, except for ordinary shares".
"The ABA supports a general requirement for the power to be exercised from time to time in consultation with APRA," said the ABA.
"There should be a more explicit legal obligation for ASIC to consult with APRA on product interventions for products whose features are prescribed by and are regulated by APRA, for example, MySuper products and banking capital raising products, such as hybrids."
CBA told the parliamentary committee it has "provided public support" for the measure and has been "involved in the consultation process".
A spokesperson for CBA said the bank "does not have a submission to share".
The ifa Excellence Awards are back in 2021 and nominations are now open! This prestigious accolade recognises exceptional professionals within the financial advice industry, shining a light on the outstanding achievements from the nation's best and brightest. If this sounds like you or someone you know, then nominate today for the ifa Excellence Awards 2021!
Administrators have commenced closing down subsidiaries within a group of companies involved in a $200 million alleged fraud against Westpac...