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LIBOR Discussion Paper – AFMA/ABA/FSC Submission

1 September 2021

At a high-level, AFMA, ABA and the FSC would support the ATO outlining a practical approach to the taxation consequences on IBOR-transition which leverages existing processes being undertaken by affected taxpayers and categorises the various affected contracts from a risk perspective. This would ensure that compliance resources are appropriately allocated. The approach adopted in PCG 2017/8 regarding internal derivatives would be an appropriate precedent for such an approach.

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Electronic Mortgages in WA

31 August 2021

Electronic signatures can mitigate fraud risk by implementing multi-layers and factors of security and authentication, and the technology can generate an auditable electronic record, tamper proof seal, and use multiple ways to authenticate the signatory's identity. Most mortgages are not created pursuant to deeds. As such consideration of reforms in Western Australia should distinguish between the reforms that are necessary to enable electronic mortgages including the counterpart mortgage, and the reforms that need to be made to enable electronic deeds. The ABA strongly supports reforms to enable electronic deeds and not requiring most types of deeds to be witnessed.

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Australia’s cyber security regulations and incentives

27 August 2021

The ABA sees an important role for government in coordinating messaging and cyber security uplift efforts across stakeholder groups and sectors, and setting clear expectations of what entities should do to protect themselves and their customers. The ABA acknowledges that there is a difficult but important balance to be struck between, on the one hand, economy wide, consistent cyber security regulatory requirements that improve the nation’s cyber risk position and, on the other hand, more specific or targeted measures which need to respond to specific risks and/or levels of risk. Further clarity will also be required for entities that may be indirectly subject to SOCI Act requirements, and for entities that may move in and out of the SOCI Act regime. The ABA seeks further information about the legal form that the governance standards would take and what legal standing (if any) the standards would have. The ABA asks for clarity on the interaction between the proposed standards and other regulatory regimes.

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Bank Capital Reforms: Update

20 August 2021

We support a revised capital framework that strengthens the financial resilience of the industry, embeds unquestionably strong levels of capital and also provides for greater flexibility in periods of stress. We recommend that APRA: • replace the parallel run with targeted quantitative impact surveys (QIS) • delay the implementation of the standardised approach for foundation and advanced internal ratings based (FIRB and AIRB) authorised deposit-taking institutions (ADIs) • reduce the regulatory reporting burden on ADIs for March 2023, and • delay the implementation of new Pillar 3 changes to 2024.

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APRA consultation on zero and negative interest rates

20 August 2021

Given the uncertainties arising from the COVID-19 pandemic and the related economic impacts, the ABA understands the importance of ensuring systemic stability and preparedness of members for a range of risks, including a zero or negative cash rate. The ABA considers the timing of the development of solutions by 30 April 2022 may be insufficient given the impact that these solutions would have to ADI core banking systems, processes and potential amendments to product terms and conditions.

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Contingent Liquidity: Proposed Guidance

20 August 2021

The ABA supports maintaining an excess reserve of eligible assets for contingent funding to ensure stability during periods of stress. However, we have concerns regarding the revised requirements as currently proposed by APRA. In particular: 1. It is well-above international standards 2. It is proposed to include offshore operations 3. It is to apply at all times 4. An implementation pathway has not been proposed

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Anti-hawking: Update to RG 38

18 August 2021

In the ABA’s view, the guidance detailed throughout RG38 provides clarity over the forms of communication subject to the prohibition, the nature and scope of a consumer’s consent. However, the guide does not adequately consider the types of interactions between customers and frontline staff. These interactions vary greatly and, in many cases, involve a frontline staff member needing to gain an understanding of a customer’s needs to educate them on the scope of products.

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2021 Credit Reporting Code consultation

11 August 2021

The ABA provides the following recommendations and observations: 1. Promises to pay vs. financial hardship arrangements: We are concerned that ARCA’s proposal to define financial hardship arrangements (FHAs) is overly prescriptive and conflicts with elements of the National Consumer Credit Protection Act 2009 (NCCP). 2. Backdating the start of a financial hardship arrangement: The ABA does not support the approach allowing backdating of a financial hardship arrangement. 3. Payment test & catch-up periods: The ABA is supportive of the proposal for a payment test period or catch-up period to be treated as a financial hardship arrangement where the arrangement immediately follows, and is in response to, an earlier financial hardship arrangement. 4. Treatment of joint accounts where abuse is present: We are supportive of the interim proposal that ARCA has proposed to take extra care of customers experiencing family and domestic violence (FDV).

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Deferred Sales Model Exemptions

9 August 2021

The ABA supports the Government’s proposed regulations to exempt insurance products from the deferred sales model that provide high value and are well understood by consumers. This provides a more targeted approach to add-on insurance products subject to the deferred sales model and will address consumer harms and poor value identified by the Royal Commission without affecting the availability and accessibility of high value insurance products. However, the ABA considers there is further room to refine the proposed regulations in relation to business insurance.

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Loans impacted by COVID-19: APRA regulatory support

6 August 2021

The ABA considers that the part and full repayment moratoriums, offered as part of the ABA 2021 national support package, aligns with the regulatory approach provided for in draft Attachment E to assist banks in supporting customers through this period.

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