The announcement comes as the Council of Financial Regulators (CFR) released a report on the review of the regulation of SVFs in Australia.
SVFs are payment services that enable customers to store funds in a facility for the purpose of making future payments, which include international money transfers, gift cards, prepaid cards and digital wallets.
The report noted there is potential for SVFs to become a more prominent part of the payments system as part of a rapidly changing global market that encourages innovation and consumer choice.
Some of the CFR’s recommendations include:
- Regulation of SVFs and other payment products should be graduated and commensurate with risks to consumers.
- To streamline regulation, the RBA should no longer be involved in regulating individual providers of SVFs.
- APRA should be responsible for prudential supervision of providers of large SVFs that offer similar functionality to bank deposits, with the existing prudential framework reformed to make it simpler, more targeted to risks and better aligned with international approaches.
- ASIC should be responsible for regulating providers of SVFs (and other payment products) that do not meet the criteria for APRA supervision; and these SVF providers should be subject to additional requirements to ensure the safety of customers’ funds.
- Compliance with the ePayments Code should be mandatory for payment product providers.
The release of the CFR report follows an announcement in the 2020–21 federal budget for a new regulatory framework for SVFs that is aimed at reducing red tape, uncertainty and complexity and bring Australia in line with its key global financial partners.
Assistant Minister for Superannuation, Financial Services and Financial Technology Jane Hume said changes to legislation and prudential standards are needed to give effect to the reforms.
“I have asked Treasury to work with APRA and ASIC to develop the reform package, and to do so in close consultation with a wide range of industry and consumer stakeholders,” Ms Hume said.