Welcome to the latest edition of our Banking Sector Newsletter.

The Reserve Bank of Australia (RBA) decided to increase the cash rate target by 25 basis points to 3.85 per cent. It also increased the rate paid on Exchange Settlement balances by 25 basis points to 3.75 per cent. Given the importance of returning inflation to target within a reasonable timeframe, the Board judged that a further increase in interest rates was warranted.

The Government has released the Review of the Reserve Bank of Australia, which analyses the RBA’s performance over the past 30 years and makes recommendations on the monetary policy framework, governance, leadership and culture of the RBA.  Governor Philip Lowe welcomed the Review Panel’s support for the current monetary policy framework in Australia, including the flexible inflation target and the operational independence of the Bank.

The newsletter also includes our usual round-up of practice notes, cases and legislation.  

In the media

Consultation commences on AML/CTF reforms

The Attorney-General announced public consultation on proposed reforms to Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime. The proposed reforms include extending the existing AML/CTF legislation to capture additional ‘tranche-two’ high risk entities including lawyers, accountants, trust and company service providers, real estate agents and dealers in precious metals and stones. https://www.austrac.gov.au/consultation-commences-amlctf-reforms

ASIC releases Information Sheet 278: Inventory of superannuation trustee transparency and disclosure obligations

ASIC has released a new information sheet consolidating super trustee transparency and disclosure obligations into one webpage with links. Transparency and disclosure obligations support the public to better understand how trustees manage their super funds.ASIC recommends that trustees use this information sheet as a resource to better comply with their obligations. https://asic.gov.au/about-asic/news-centre/news-items/asic-releases-information-sheet-278-inventory-of-superannuation-trustee-transparency-and-disclosure-obligations/

Whistle while you work

A recent ASIC review has identified good practices for overseeing whistleblower programs, which all directors are encouraged to consider, writes Commissioner Danielle Press. https://asic.gov.au/about-asic/news-centre/articles/whistle-while-you-work/

ASX down, Japan’s Kirin to buy Blackmores for $2 billion, Wall St eases as First Republic banking crisis outweighs tech profits

The ASX 200 has dipped into the red for the fifth trading session in a row and Japan’s Kirin Holdings has announced it will pay $1.9 billion to buy health products maker Blackmores. Blackmores will be delisted from the stock exchange and become a private company. https://www.abc.net.au/news/2023-04-27/markets-asx-shares-live-updates-first-republic-meta/102271012

APRA response to Reserve Bank of Australia Review

The Australian Prudential and Regulation Authority notes the release of the review of the Reserve Bank of Australia (RBA) and the responses by the Government and RBA. APRA welcomes the recommendations of the report that relate to APRA. APRA notes recommendation 6 is directed towards reinforcing cooperation arrangements for promoting financial stability. This includes refreshing memorandums of understanding to provide greater public clarity regarding Council of Financial Regulator (CFR) agency roles and introducing greater formality to macroprudential policy cooperation arrangements. https://www.apra.gov.au/news-and-publications/apra-response-to-reserve-bank-of-australia-review

Review of the Reserve Bank of Australia

The Reserve Bank welcomes the release of the Review of the Reserve Bank and the government’s response. The Review is comprehensive and covers the Bank’s objectives and responsibilities, the framework for monetary policy, the governance of the Bank and the way the Reserve Bank Board and the Bank operate. The Bank thanks the Review Panel and Secretariat for their work and all those who provided submissions. https://www.rba.gov.au/media-releases/2023/mr-23-09.html

Statement by Philip Lowe, Governor: Monetary Policy Decision

At its meeting, the Board decided to increase the cash rate target by 25 basis points to 3.85 per cent. It also increased the rate paid on Exchange Settlement balances by 25 basis points to 3.75 per cent. The Board held interest rates steady last month to provide additional time to assess the state of the economy and the outlook. While the recent data showed a welcome decline in inflation, the central forecast remains that it takes a couple of years before inflation returns to the top of the target range; inflation is expected to be 4½ per cent in 2023 and 3 per cent in mid-2025. https://www.rba.gov.au/media-releases/2023/mr-23-10.html

In practice and courts

ASIC

23-106MR ASIC releases updated guidance for licensees on reportable situations
https://asic.gov.au/about-asic/news-centre/find-a-media-release/2023-releases/23-106mr-asic-releases-updated-guidance-for-licensees-on-reportable-situations/

AAT Bulletin

Issue No. 7/2023, 11 April 2023
https://www.aat.gov.au/AAT/media/AAT/Files/AAT%20Bulletins/7-23.pdf

Published articles, papers, reports

An RBA fit for the Future

To be ready to face current and future challenges, Australia needs a clear and robust monetary policy framework, effective decision-making arrangements, and a high performing institution that best supports decision makers. Taking the lessons from recent performance along with evidence gathered from submissions, consultations and engagement with RBA staff, the Review makes recommendations grouped into five themes that reinforce each other (Figure 1). Together they will deliver an RBA that is fit for the future.

Interim Economic Inclusion Advisory Committee 2023–24 report to the Australian government

In December 2022, the Federal Treasurer, Jim Chalmers, and the Minister for Social Services, Amanda Rishworth, established an Interim Economic Inclusion Advisory Committee. The Committee provides non-binding advice on boosting economic inclusion and tackling disadvantage, including policy settings, systems and structures, and the adequacy, effectiveness and sustainability of income support payments. Its advice is to be delivered ahead of every Federal Budget.

Legislation

Income Tax Assessment Act 1997

C2023C00089 • Act No. 38 of 1997 as amended • Registered: 21/04/2023

Royal Commissions Act 1902

C2023C00088 • Act No. 12 of 1902 as amended • Registered: 21/04/2023

Telecommunications Act 1997

C2023C00087 • Act No. 47 of 1997 as amended • Registered: 20/04/2023

National Health Act 1953

C2023C00085 • Act No. 95 of 1953 as amended • Registered: 19/04/2023

Telstra Corporation and Other Legislation Amendment Act 2021

C2023C00086 • Act No. 140 of 2021 as amended • Registered: 19/04/2023

Industry Research and Development Act 1986

C2023C00084 • Act No. 89 of 1986 as amended • Registered: 19/04/2023