"The Race for the Prize" - Review of Payment System Regulation in Australia

In October 2020, the Commonwealth Government announced a rapid-fire review of "regulatory architecture" of the Australian payments system. The review will be chaired by Scott Farrell, who has undertaken reviews on Open Banking and Consumer Data Right. The review will be supported by the Commonwealth Treasury and not the Reserve Bank of Australia and has a broad mandate including:

- The current structure of the governance and regulation of the payments system to assess whether it is fit for purpose;

- How to create more productivity-enhancing innovation and competition in the payments system, including the roll out of the New Payments Platform;

- Ways to improve the understanding of businesses and consumers of alternative payment methods;

- Whether government payment systems, including payments to citizens, are agile and can take advantage of new payments functionality; and

- Global trends and how Australia should respond to remain internationally competitive.

A key paragraph on "regulatory architecture" says:

"The regulatory architecture that applies to these new technologies, businesses and products have served us well, but have remained largely unchanged for over two decades. This review would look at the roles of industry self-regulation, regulators and the Government and consider whether the balance is right in promoting competition, innovation, efficiency, resilience and stability of the system."

Clearly the respective roles of the RBA (central bank), ACCC (competition regulator), ASIC (financial services conduct regulator) and APRA (prudential regulator) as well as AusPayNet as self-regulator are all in the mix.  

Some Australian trade media speculates that Scott Farrell likes the UK model which would suggest:

- a strong focus on competition (which has been key for the UK Payment Systems Regulator);

- the operation of the Payments System Board within the RBA; and

- the governance of AusPayNet (which remains majority bank controlled where both UK and Canada have reformed the governance of similar bodies)

could all come under close scrutiny.

The report to Government is due April 2021 - six months away - and the Review will be seeking views from the industry and consumers on the regulatory architecture "that would be conducive to greater innovation and technology take up".

More information is available here:

https://treasury.gov.au/review/payments-system-review/terms-of-reference

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