New Financial Services Minister Stephen Jones has said the Albanian government will continue with plans to bring Buy Now, Pay Later (BNPL) operators such as Zip and Afterpay under credit laws, in a new move brought to the sector in difficulty.
In an interview with Guardian Australia, Jones also indicated that the new government could require the company watchdog to reinstate the “why not plead” approach it abandoned last year, and said that would act to regulate cryptocurrency exchanges in the same way as other financial markets.
He said the government would fill a vacant commissioner’s seat on the Australian Securities and Investments Commission left by the departure last Thursday of Cathie Armour, who was responsible for overseeing markets, including the stock exchange.
And he will move on to revising the benchmarks used by the Australian Prudential Regulation Authority to measure the performance of superannuation funds after allegations they gave a head start to underperforming funds managed by the profit sector. lucrative.
BNPL operators are currently exempt from laws intended to protect borrowers who use products such as credit cards or personal loans, because the product they offer is technically not credit.
The sector has opposed the regulation, saying it has put in place an industry code of conduct.
While the sector was once a darling of the stock market, more recently share prices have crashed as profits have largely proved elusive amid fears that bigger players, including banks and technology companies are entering the market.
The share price of Australia’s leading BNPL group, Zip, fell more than 14% on Tuesday after news that Apple would offer its own BNPL product.
“Products like Zip and Afterpay, I think are a good innovation in the credit market,” Jones said.
“Can we stop arguing about whether [they’re] credit or not? It really is a dead end street.
“Let’s start working on the regulation [them] in the credit area. We welcome the fact that they have introduced a code, [and will] move on to legislating and closing the gaps.
He said he would work with Treasurer Jim Chalmers on a new statement of expectations setting out what the government expects from Asic.
Asic took a ‘why not plead’ approach in 2019, on the recommendation of Royal Banking Commissioner Kenneth Hayne, whose investigation delved into the regulator’s failures to rein in a greed-driven culture within the financial services industry.
In September, as Asic reeled from a series of attacks on it by government backbenchers, Chairman Joe Longo gutted the phrase from the regulator’s business plan.
At the time, Longo dismissed the criticism, saying he didn’t see any “soft pedaling or whatever other words people like to use on the app issue.”
However, Jones told Guardian Australia he wanted the cultural shortcomings within Asic identified by Hayne to be addressed and the reforms proposed by the commissioner to be adhered to.
Asked if that specifically meant bringing back ‘why not litigate’, he replied: ‘We expect that all shortcomings, cultural and otherwise identified by the Hayne Royal Commission and proposed remedies will be embraced and maintained. by regulators.
Armour, a former Macquarie Group executive, left Asic without fanfare last Thursday after nine years. Former Treasurer Josh Frydenberg has neither extended his term nor named a replacement to handle the large markets portfolio, which includes oversight of the Australian Stock Exchange.
Jones said a replacement would be appointed by Chalmers after consultation with Treasury portfolio ministers and the Prime Minister.
“It’s obviously a hugely important function, and we want to make sure that [Asic] has more capacity,” he said.
He said he would continue a consultation process started by Frydenberg on cryptocurrency regulation.
He said his goal was to make cryptocurrency trading “transparent where it is currently opaque.”
“It all leads to several things,” Jones said.
“One is proper regulation through exchange market powers. This also raises questions as to whether and how cryptocurrency as a commodity is regulated in our financial services system – is it regulated as a financial product?
“Or do we have an autonomous means of recognizing and regulating? These are issues we need to work on. »
On the super, he said reviewing the performance criteria would be “a matter of priority”.
The government will also act on “a few court rulings with perverse effects that we need to put in place remedial legislation so that people are not disadvantaged,” Jones said.
“You’ll notice the Prime Minister when he was in Indonesia yesterday said he wanted to get Australian super funds considering Indonesia as a destination for their offshore investments, a bit of work needs to be done in that space as well .”
Jones said the previous government left him with many issues to work out and his first priority was to figure out “where the hot bridges are.”
“You can rest assured that if a tough decision or a tricky issue was faced by the Morrison government, it stuck – it will be in our inbox,” he said.