Letter to Adele Ferguson 5 Oct 2019      Defined Terms and Documents  

5.        A brief second wave of the Royal Commission to right the wrongs within the most differentiated Product in the entire Western World, because -

            *        12.58% of all Credit Cardholders, invariable with low Financial Literacy Capacity, have paid 80% circa of all Interest and Penalty Fees Revenue; and

            *        five former Prime Minister's have attested that Australia is an egalitarian country

The Interim Report from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry found faults in the regulatory performance of ASIC and APRA.  Alas it did not investigate patent Unconscionable Conduct amidst the most widely used lending product in Australia, namely Credit Card Products  - the antithesis of the User Pays Principle with 67% circa of Credit Cardholders, known as Transactors, enjoying a Free Ride, whilst 12.54% circa of Credit Cardholders, identified by the Reserve Bank as Persistent Revolver, contribute 80% circa of all Interest and Penalty Fees Revenue.  The complexity and massive differentiation within Credit Card Products is conceivably the reason that Commissioner Hayne avoided investigating the marketing and pricing by some Credit Card Issuers.

The Royal Commission into Financial Services in 2018 failed to recognise an alleged manifest breach of Statutory Duty by the Reserve Bank (summarised in Extensive Powers and Parliamentary Bestowed Mandate) by not recommending to the Federal Govt., as far back as July 1992, to reintroduce a maximum interest rate on Credit Cards, pursuant to under Section 11(1) of the Reserve Bank Act 1959 and the various Federal Govts for not invoking sub clause (xiii) of Section 51 of the Australian Constitution to pursue a maximum interest rate on Credit Cards. 

Pursuant to the Royal Commissions Act 1902 (Cth) and clauses (g), (h) and (j) of the Terms of Reference of the 2018 Royal Commission into misconduct in the Banking, Superannuation and Financial Services Industry, the Writer seeks by 1 April 2020 a second wave (two weeks of hearings/cross examination) that -

1.        investigates the Writer's alleged systemic failings of the non-statutory Council of Financial Regulators performance over the Credit Cards Payments System and the highly differentiated Credit Card Products; and

2.        seeks the Council of Financial Regulators to account for the alleged inept behaviour identified in this letter, not limited to requiring the Principal Regulator of the Payments System to -

          (i)     elucidate on the RBA's Extensive Powers and shoulders Responsibilities to All Australians and for its Payments Systems Board to always Act in the Public Interest; responsibilities not held by the 'central bank' of the UK or the USA, namely the US Federal Reserve and the Bank of England to -

                   (a)       request any financial information from ADIs that it wants to examine; or

                   (b)       responsibilities to "........best contribute to........the economic prosperity and welfare of (ALL) the people of Australia".

         (ii)    explain why it did not recommend to the Federal Govt to reintroduce a maximum interest rate on Credit Cards when the Bank Interest Rate Margin exceeded 16% -  back in June 1992, pursuant to Section 11(1) of the Reserve Bank Act 1959, mindful of sub clause (xiii) of Section 51 of the Australian Constitution.

         (iii)    recommend to the Federal Govt under Section 11(1) of the Reserve Bank Act 1959 a maximum interest rate for all Purchases and a slightly higher maximum interest rate for all Cash Advances; and

         (iv)    reflect, with the value of hindsight, if the below concern expressed by the then Westpac CEO, Bob Joss, (previously Wells Fargo) to the Wallis Inquiry in 1997 was prophetic:

   "Also relevant is the Inquiry’s concern with fairness, or the equitable treatment of the various users of the financial system."

             "Protection of consumers

    On-going monitoring of credit card pricing in anticipation of a substantial inquiry into the effects on consumers of the deregulation of credit card interest rates"

(v)     comment whether  "A movement towards a “user pays” approach to credit card payment services would be consistent with the approach adopted by Australian financial institutions in pricing other payment instruments under their control." ("RBA's Reform of Credit Card Schemes in Aust:  "A Consultation Document" – Dec 2001) was every effectively implemented on the Retail Supply Side of Credit Cards?  

        (vi)   opine on the seven other recommendations (in Section 8 of the Writer's Submission to the RBA dated 8 Dec 2011) re changes to Credit Cards, many to better protect Australians with poor Financial Literacy Skills.