Chapter 16.     The Reserve Bank could reduce insolvencies, bad debts and Extreme Financial And Emotional Distress by regulating Credit Card Issuers to conform Credit Cards closer to the original Charge Card

                            The current arrangement of Credit Card Issuers seeking data from one or two of Three Credit Rating Agencies is not working as the credit data is not complete, unless data from all three Credit Reporting Agencies is sourced

There are over 16 million Credit Cards held by Cardholders in Australia netting a national debt of over $51 billion, with around $32.5 billion accruing interest due to not being repaid within the Interest Free Period or from Cash Advances.  70.19% of Australian adults own a credit card. 

In Aug 2005, chief executive of the Australian Bankers' Association, David Bell, denied the fees were penalties, and said customers could avoid them. "We always act ethically and in a law-abiding fashion," he said.  Mr. Bell said: "There are many ways of checking the state of your account - ATM balance enquiries, telephone banking, the internet, asking at your branch and bank statements."  The bankers' association has resisted calls for an inquiry into fee income.  Mr. Bell said banks' costings were commercially sensitive and "every business in Australia has the right to keep certain information private". 

Malcolm Edey, Assistant Governor (Financial System) in an address to the Speech at the Cards & Payments Conference on 21 May 2015 noted:

*         RBA's key areas of focus included capacity for richer information with payments.

*         "On current scheduling the New Payments Platform will deliver a fast payments service with rich information and addressing capabilities in the second half of 2017 

Below are three quotes from The Wallis Report on the Australian Financial System: Summary and Critique June 1997 that support 'price controls' and unbundling the 'Sweets', Sours & Spiders' within Credit Cards to deliver a 'Vanilla' Revolving Line of Credit:

*        Chapter Five: 'Philosophy of Financial Regulation'  "Third, regulation can help achieve social objectives such as, for example, 'community service obligations' which typically take the form of price controls."

*        Chapter Nine: 'Stability and Payments' "There is scope for increased competition in the payments system which will help to lower its costs of operation.  However, this must be balanced against the need to maintain stability in the financial system. The payments system provides one central way in which instability can be generated.  The RBA should retain overall responsibility for the stability of the financial system, the provision of emergency liquidity assistance and for regulating the payments system."

*        Chapter Eleven: Promoting Increased Efficiency "Cross-subsidies are derived from historical product bundling [evident in (a) to (g) of Chapter 3 above], earlier difficulties with apportioning costs, and community expectations that institutions should meet community service obligations. The unwinding of such cross-subsidies can increase efficiency in the financial system."

Reserve Bank of Australia - Our Role (and the 2nd paragraph in Chapter 9 above) establishes that -

*           The Payment Systems (Regulation) Act 1998 gives the Reserve Bank of Australia extensive powers to gather information from a payment system or from individual participants.

*           the Reserve Bank Board’s obligations with respect to monetary policy are laid out in Sections 10(2) and 11(1) of the Act. Section 10(2) of the Act, which is often referred to as the Bank’s ‘charter’, says:

‘It is the duty of the Reserve Bank Board, within the limits of its powers, to ensure that the monetary and banking policy of the Bank is directed to the greatest advantage of the people of Australia and that the powers of the Bank ... are exercised in such a manner as, in the opinion of the Reserve Bank Board, will best contribute to:

1. the stability of the currency of Australia;
2. the maintenance of full employment in Australia; and
3. the economic prosperity and welfare of the people of Australia.’

The Four Pillars account for around 80 per cent of the credit card market.  Notwithstanding the extraordinary market dominance of the Four Pillars compared to any other Western country, and the ease with which financial data could be obtained by the Reserve Bank for 80% of the Australian Credit Card market, none of Australia's Three Financial Regulators -

(A)        report annually to the Australian Parliament on each of the Four Pillars Net Revenue and Net Costs break-up of their cumulative Credit Card Products; and

(B)        report annually to the Australian Parliament whether any Credit Card Issuer/s is -

             (i)        charging Usurious Interest Rates On Any Credit Card Products; or

             (ii)       applying Numeracy And Literacy Discrimination by concealing hidden costs (in advertising) Credit Cards to prey on Australians with only Level 1 or Level 2 Financial Literacy Skills as identified by the Productivity Commission's Staff Working Paper and the ABS.
(Numeracy And Literacy Range Of Australians explains that based on a Productivity Commission report only slightly over half the Australian population possess the minimum required Financial Literacy Capacity and numeracy skills of Level 3 "to meet the complex demands of everyday life and work in the emerging knowledge-based economy".)