5.        Reform of Credit Card Schemes in Aust:  "A Consultation Document" – Dec 2001 evidences that Reserve Bank advocated (on page 116) 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” which never crystallised perhaps because the Four Pillars exerted pressure as evident in the below extract from Son of Campbell ... by Glenda Korporaal, The Australian, June 21, 2013:

Hockey vividly remembers one day in the early 1990s when he was a junior adviser to then NSW finance minister George Souris. The minister received a visit from the chiefs of the big four banks, who were opposed to plans to introduce a financial institutions duty. "The four chief executives came in to bully," Hockey says. "There was Bob Joss [Westpac], Don Argus [National Australia Bank], David Murray [Commonwealth Bank] and Don Mercer [ANZ]. They came in - just the four of them - to belt up this minister.  I was his adviser. There were only six of us in the room.

"I well remember their attitude and I thought to myself: Well, it is good to provide the respect, but it is also the case that they are in it for themselves and their banks - as they should be. But I am in it for the community."

6.        Perhaps Nugget Coombs famous quotation is close to the mark as to why a movement ".....towards a "user pays" approach to credit card payment services.... " forecast by the RBA on page 116 of Reform of Credit Card Schemes in Aust:  "A Consultation Document" never materialised.

  7.        Point 8. of 'Supporting Evidence re 1st Question' explains that the Writer posted three CDs to Ms. Sharon van Etten at the RBA that -

   (i)         asserted that Credit Card Issuers' revenues from Credit Cards on the Retail Supply Side did not accord with the User Pays Principle because Credit Cardholders with poor Financial Literacy Capacity (described by the RBA as Revolvers, some being Persistent Revolvers) were paying the costs of Revolving Line/s of Credit of Credit Cardholders with strong Financial Literacy Capacity (described by the RBA as Transactors); and

   (ii)      implored the Reserve Bank to effectively, Determine Standards, to implement the User Pays Principle as listed in Section 8 of the Writer's CD submission to RBA sent 8 Dec 2011 which also could replace the debt 'lure' of an Interest Free Period with a Purchase Usage Fee and a Concessional Interest Rate Period for making each Purchase with a Credit Card 'so that each user pays'.

    Below is part of Part B) of Section 8 of the Writer's CD submission to RBA sent 8 Dec 2011:

"B)      determine rules for participation in a payment system and set Standards for safety and efficiency, incl. issues such as performance benchmarks" by proceeding to implement "cost-based benchmarks" [akin to (I.), (II.) and (III.) in Section 2 [of this letter to the RBA] by -

            (a)       

                         iii)     $90 for the maximum Annual Credit Card Fee that a Credit Card Issuer can charge (in 1993 restrictions on annual fees for credit cards were removed, so it is not unreasonable to introduce a cap, particularly as some cards charge inordinately high annual fees to provide 'inter alia' high loyalty points which surprisingly avoid income and FBT taxes.  Why should a Credit Cardholder be entitled to claim as a tax deduction an annual fee of $395 to then earn 3 points for every dollar spent and not pay income tax on that earning?)

                         

            (b)        learning from point 1. of CBA's research in Section 4, set an 'Access Regime' that each credit card issued in Australia to a person who has not previously owned a credit card be a Provisional Charge Card, hereinafter PCC, with a conservative credit limit where the owner of the PCC is required for the initial 12 months to repay the outstanding balance on the PCC in full by the due date (9 days from the Issue Date and 7 days from the normal receipt date for postal delivery) or be subject to severe late fees and restrictions on future PCC use, with deferment of receiving a traditional Credit Card until the PCC owner complies with the PCC repayment obligations for 12 months without breach.   

C)        reduce the non-interest period from 'up to 55 days' to 'up to 42 days' to reduce the cost burden on Credit Card Issuers because electronic payments enable Credit Card Users to pay their monthly repayments within a few days of notification of the final monthly balance.   

D)        continue to sanction the market practice of not providing a non interest period for Cash Advances, but restrict the limit for Cash Advances to 50% of the total credit limit because as Wikipedia explains -
*        "a credit card is a small plastic card issued to users as a system of payment"; and
*         the original cards "required the entire bill to be paid with each statement".

E)        increase the minimum repayment required from 2.5% to 25% of the outstanding debit balance which shouldn't faze over >60% of credit card owners and will materially reduce the interest burden on the remaining <40%.

F)        allow Credit Card Issuers to levy -

             a)        an explicit 'Lost Card Fee' for -

                         *          placing a stop on an account; and/or

                         *          issuing a replacement credit card(s) commensurate with the cost to the Credit Card Issuers of issuing a replacement credit card(s); and

             b)        a 'Fraud Provision Fee' upon each credit card user each month based on the quantum of transactions and the outstanding undrawn indebtedness (eg. for a credit card user with a $5,000 credit limit, who made 10 purchases in a month, with an outstanding undrawn balance of $3,000 (vulnerable to fraudulent access) the 'Fraud Provision Fee' for that month would be say 10 @ 0.15c = $1.50 + say $3,000 @ 0.0003c = $0.90 for a total monthly 'Fraud Provision Fee' of $2.40 for enjoying the convenience of using a credit card for 10 transactions with a $5,000 credit limit.  

G)        establish a uniform credit evaluation methodology that all Credit Card Issuers must observe similar to NAB's Microenterprise Loans because to many Australian adults are obtaining credit cards with excessive interest rates which would be lower if the defaults were lower due to a robust standard credit analysis methodology.

H)        prosecute the case on behalf of the "unlucky" Australians with Baycorp Advantage 'et al' and the Credit Card Issuers to establish and regulate protocols and systems so "unlucky" Australians cannot obtain between 6 and 10 credit cards, as evidenced by Tony Devlin, Head Financial Counsellor, Salvation Army's Moneycare service, in Section 4 above."  

  When pondering the above recommendations to far better accord with the User Pays Principle, the merits of replacing the debt lure of an interest free period with a Concessional Interest Rate Period, and applying a Purchase Usage Fee should also be weighed up.

9.        Reserve Bank webpage Credit Cards Regulatory Decisions evidences that the Reserve Bank, the legislative appointed protector of Credit Cardholders, did naught for the Retail Supply Side prior to March 2014.  RBA breached it Extensive Responsibilities to Persistent Revolvers by taking 12 years circa to 'stamp out' five ploys of Unconscionable Conduct listed in the below Joint Media Release that initially surfaced in the USA, migrated to the UK and onto Australia - 18 months slower than the UK Regulator, BIS:

                "Getting a Better Deal on Credit Cards and Mortgages"

==================================================================================================

4th Question

Will the Royal Commission recommend that the Governor of the Reserve Bank draw upon its existing powers to replace the debt 'lure' of an Interest Free Period with a -

*        Concessional Interest Rate Period; and

*        Purchase Usage Fee,

for making each Purchase with a Credit Card 'so that each user pays' for the benefits of a Revolving Line/s of Credit?

=================================================

Supporting Evidence re 4th Question

Unconscionable Credit Card Interest Charging notes that -

(A)      when Credit Cards were first launched in Australia in the 1970s, interest was charged only on any unpaid part of the Closing Balance after the Payment Due Date.  Over time, more and more 'cute' Credit Card Issuers began changing the 'fine print' in their Conditions of Use, until nearly all Credit Card Issuers charged interest on all Purchases from the date of each Purchase if the Credit Cardholder did not pay the entire Closing Balance by the Payment Due Date; and

(B)      then some Credit Card Issuers started cancelling the Interest Free Period for the subsequent month or two months.

These punitive interest cost measures were targeted at Financially Uneducated And Vulnerable  Credit Cardholder with poor Financial Literacy Capacity that may experience Extreme Financial And Emotional Distress.

Former Qld Premier, and now Australian Bankers Association chief executive, Anna Bligh, has been chartered with lifting the credibility of 'inter alia' Credit Card Issuers, after her predecessors, David Bell and the long running, Steven Münchenberg, facilitated bank greed involving Unconscionable Conduct.  

ABC News article, Banks revamp code of practice in face of scandals, royal commission -

(A).      informs that the current CEO of the ABA, Anna Bligh, announced in late Dec 2017 that the ABA had just lodged a 'Banking Code of Practice' with the Australian Securities and Investments Commission (ASIC) for approval; and

(B).      lists several changes that will be legally binding on all 'member banks' of the ABA which includes:

                    "Customers only paying interest on what remains on a credit card and not the full amount of purchase if a loan is being paid down."

The fact that the ABA has made it mandatory in its recently lodged 'Banking Code of Practice' that its members charge interest on only any unpaid portion of the Closing Balance after the Payment Due Date is patent evidence that the previous long-running practice (explained above) was Unconscionable Conduct targeted at Credit Cardholder with poor Financial Literacy Capacity.

Hence, the ABA has ruled it mandatory that its members desist (A) above.  The Writer has validated that St. George Bank has so ceased this practice because the St. George Credit Cardholder referred to in Example 1 of Labyrinth of ‘Concealed Spiders’ checked with St. George Bank.

(B) above has to be similarly eradicated because it is a 'penalty' more generally suffered by Financially Uneducated And Vulnerable  Credit Cardholders which is unlawful.

==================================================================================================

5th Question

When Dr. Edey was questioned before the Senate Economics Legislation Committee regarding a dearth of competition in Credit Card interest rates when the Overnight Cash Rate is at an all-time low of 1.5%, Dr. Edey responded:  "... we do not have an interest rate regulator in Australia............... What we do have is an ACCC that can investigate uncompetitive conduct if they see it, but they clearly have not seen it in this market".  Will the Royal Commission ask the Governor of the Reserve Bank why the former Assistant Commissioner, Dr. Malcolm Edey, made the below comments on 1 June 2015 that resiled the RBA's obligations and responsibilities to ".....promoting competition in the market for payment services,  .....", pursuant to -

1.          Sect 10B(iii) of the Reserve Bank Act 1959; and

2.          Extensive Powers and Responsibilities of the RBA?

=================================================

Supporting Evidence re 5th Question

Australia's 'central bank', the RBA -

(A)       had previously capped Credit Card interest rates @ 18% until April 1985 relying upon Section 50 of the Banking Act 1959; and

(B)       the RBA imposed an Access Regime on the three previously designated Credit Card Schemes in Aust on 23 Feb 2004 and thereby inherited carriage for all of the ACCC's responsibilities re " ..... for competition and access....".

Hence, the ACCC's obligations regarding pursuing competition amongst Credit Card Issuers were subrogated to the RBA on 23 Feb 2004 because the RBA had imposed an Access Regime on the three previously designated Credit Card Schemes, pursuant to Division 3—Access to designated systems - Subdivision A—Access regimes - 12  Imposition of access regime and has subsequently set other Standards chronicled in Credit Cards Regulatory Decisions pursuant to Division 4, Section 18 of the Payments System Regulation Act 1998.  This re-assignment of responsibility for ensuring 'competition' to the RBA is set out in the MoU between the ACCC and the  RBA dated 8 Sept 1998.

How could a very senior representative of the RBA with over 20 years experience working for the RBA not know that the RBA shouldered all of the ACCC's obligations re ensuring competition from 23 Feb 2004?  It defies belief for Dr. Edey to have responded "What we do have is an ACCC that can investigate uncompetitive conduct if they see it, but they clearly have not seen it in this market". 

                    "The Payment Systems (Regulation) Act 1998 also gives the RBA extensive powers to gather information from payment system participants and operators."

==================================================================================================

6th Question

Will the Royal Commission ask the Governor of the Reserve Bank if the Senate 'Economics Reference Committee' titled Interest rates and informed choice in the Australian credit card market dated Dec 2015 was correct when it justified Dr. Edey's above-mentioned response (when being questioned about excessive Credit Card interest rates on 1 June 2017) by asserting that the ACCC is responsible to monitor and regulate bank interest rates, when those responsibilities fall upon the RBA because the RBA imposed an Access Regime on the three previously designated Credit Card Schemes in Aust on 23 Feb 2004 and thereby inherited the ACCC's responsibilities re " ..... for competition and access...." as chronicled in RBA webpage Relationship with the Australian Competition and Consumer Commission (ACCC):

==================================================================================================

7th Question

Will the Royal Commission ask the Governor of the Reserve Bank if he agrees with Dr. Malcolm Edey's below responses to the Senate 'Economics Reference Committee', because it is contrary to the findings in LOAN RATE STICKINESS: THEORY AND EVIDENCE in June 1992 and empirical evidence in the USA, the UK and Australia over the subsequent 26 years:

    "Dr Edey : Yes, the financial system works through competition. The basic wholesale interest rate is the cash rate, which we set, and then competitive forces will cause other interest rates to move up and down with the cash rate. That is the way the effect of policy is transmitted to the wider economy."

=================================================

Supporting Evidence re 7th Question

2.        'Background information re the increasing interest rate spread for Credit Cards' and Chapter 17 further explain the abovementioned RBA's Research Discussion Paper - LOAN RATE STICKINESS: THEORY AND EVIDENCE.

3.        Below are extracts from page 21 of The Senate - Economics References Committee - Interest rates and informed choice in the Australian credit card market - Dec 2015:

'Up like a rocket, down like a feather': Credit cards and the RBA cash rate

3.6 Professor Valadkhani (Department of Accounting, Economics and Law, Swinburne University of Technology) provided the committee with research he had undertaken indicating that credit   passed on 112 per cent of RBA cash rate increases (the full value of increases, plus 12 per cent), but only 53.7 per cent of rate cuts: but cuts were delayed by an average of two-and-a-half months.  Professor Valadkhani has suggested this asymmetry is an example of the 'rockets-and-feathers' effect: credit card interest rates 'shoot up like a rocket' in response to RBA cash rate increases, but 'float down like feather' when the cash rate is decreased.4 This means that over time the gap between the RBA cash rate and credit card interest rates has grown, and consumers have been left paying higher rates of interest overall.

3.7 Professor Valadkhani took issue with the banks tendency to downplay the relevance of the cash rate to credit card interest rates:

"We do not have enough information about what their funding sources are. The argument they always make is: 'We cannot pass rate cuts on because our sources of funding are different—it is not just the cash rate; it is our external sources.' My argument to banks is: if that is the case, how come, when the cash rate goes up, you immediately lift your rates? You may have other external sources that are not related to the cash rate, but you increase your rates anyway. When the cash rate goes down, though, you resort to the argument of external sources.5"

3.8 CHOICE noted that despite a falling cash rate, average credit card interest rates had gone up for both standard-rate and low-rate cards in recent years. This was of particular concern to CHOICE, because:

 …if you must have a credit card and you are on a low income that means you cannot pay off your balance every month, a low-rate card is the best option. So to see banks taking advantage of drops in interest rates to dip their hands deeper into the pockets of low-income consumers is of deep concern.6

4.      Below is an extract from TREASURY SUBMISSION TO THE SENATE ECONOMICS REFERENCES COMMITTEE INQUIRY INTO MATTERS RELATING TO CREDIT CARD INTEREST RATES - 11 Aug 2015:

Credit card interest rates have been unresponsive to movements in the cash rate

           "Despite a 2.75 percentage point decline in the cash rate since late 2011, credit card interest rates have remained high. The rates on ‘standard’ cards are currently around 20 per cent, while the rates on ‘low-rate’ cards are around 13 per cent (Figure 3). This has prompted concern that there is a lack of competition in the Australian credit card market."

5.        Below is and extract from the Government response to the Financial System Inquiry - Improving Australia's Financial System - 20 Oct 2015:

"We will also be clear in the Statements of Expectations that regulators should explain in each annual report how they have balanced competition with other elements of their mandates."

==================================================================================================

8th Question

Will the Royal Commission ask the Governor of the Reserve Bank if he agrees the logic in Dr. Malcolm Edey's below verbal exchange with the Acting Chair of the Senate 'Economics Reference Committee' on 1 June 2017, because there is Welter Of Evidence that -

*        some Credit Card Issuers, notably Citibank, offer Zero Balance Credit Cards (to other bank Credit Cardholders) that consolidate (other bank) Credit Cardholders cumulative debts; and

*        Zero Balance Credit Cards are profitable because they target other bank Credit Cardholders with poor Financial Literacy Capacity,

so much so that -

A          three months after Dr. Edey asserted (below) that a debt solution was available, ASIC requested five years data from 12 Credit Card Issuers, including the Four Pillars, Citibank, HSBC and Macquarie, to assess whether banks are deliberately targeting interest-free promotions at customers who are likely to end up taking longer to pay off their Credit Card debts; and

B        Treasury, Submission to Senate Economics References Committee Inquiry into matters relating to credit card interest rates, 11 Aug 2015 notes (on page 5) that ".... 70 of the 95 credit cards the Reserve Bank of Australia (RBA) regularly monitors currently offer discounted balance transfers listed in Appendix B.

Dr Edey : We often get asked that question. I have heard that question put a lot in relation to mortgage interest rates, because there was a period of time, particularly during the GFC, where mortgage rates were not moving one for one with the cash rate as well. The response that we have always given to that is that the cash rate is a still a significant driver of those rates, so it is still having an influence. We take into account movements in the margins between those rates in determining what the appropriate level of the cash rate is. In principle, the same is true for the credit card rates. Referring back to what I said earlier, the amount of credit card debt and interest is much smaller than is the case for mortgages and for business loans, so it is not—

ACTING CHAIR: I can understand why from the perspective of a bank, and the Reserve Bank's perspective, it is smaller in terms of overall impact for the economy. But it is fair to say that for the people who are caught in things like debt traps and who are caught with credit card debt—and they may be small numbers—it is quite significant isn't it?

Dr Edey : It is significant for the people who are paying it. But it is just not particularly big for the economy as a whole. Another thing that has been going on over the last couple of years is that there are interest-free cards, or low-interest cards, that you can get by being prepared to switch if you are on a standard credit card rate. Increasingly, people have been doing that, or they have been paying off their loans more quickly so that they do not incur interest.

ACTING CHAIR: Hang on. That is a furphy of an argument. The point is, and you just agreed to this a minute ago: the gap is at a record high for low-rate cards as well as high-rate cards. For all cards, it is at a record level, isn't it? It is not as if I can go to a low-rate card and I will be okay. Even for the low-rate cards, the gap between that and the cash rate has now reached a record level.

Dr Edey : That gap has gone up as well. But there are also zero-rate cards. The banks do offer switching packages where you can get an interest-free card if you switch banks.

Mr Campbell : For a few months.

Dr Edey : For limited periods. What I am saying is that there are ways you can take advantage of the competition that is there to reduce your interest.

ACTING CHAIR: I just want to be very clear, Dr Edey, on what you are saying. I want to be able to walk away from this and get a good understanding. The point you seem to have been making is this—and I want to put this together; tell me if this is incorrect. Firstly, what you are saying, from the evidence that you seem to be presenting, does question some of the assertions that have been made as to why the gap is so high. The point you seem to be making is: 'Yes, we are talking'—and you are going to get us the exact figures, but the default rates are quite small; the non-performance rate is quite small. We want to get to the bottom of how and why the gap between credit card rates and the cash rate has reached a record level. We are asking you, Dr Edey, whether it is something the Reserve Bank is prepared to look at, and it seems to be that the answer you are giving us is, 'No.'

Dr Edey : No, I am not saying 'No' at all. All I am really saying is: somebody should look at it, and I think that we should consult with our colleagues in other agencies to determine who is the best placed to lead it.

==================================================================================================

9th Question

Will the Royal Commission ask the Chair of the Council of Financial Regulators, who co-wrote LOAN RATE STICKINESS: THEORY AND EVIDENCE in June 1992, if he has ever discussed with the other two members of that Council, namely APRA and ASIC, that the RBA needed to inform the Government, pursuant to section 50 of the Banking Act 1959, that it is necessary for the RBA to re-regulate a maximum interest rate for Purchases and on Cash Advances due to  the burgeoning gap between the Overnight Cash Rate of 1.5% and interest rates charged on low interest and on high interest Credit Cards that peak at 29.49% for a Cash Advance using a Latitude Financial "Go MasterCard", because an SMH article by Gareth Hutchens titled APRA says everything is fine in housing market, but look at credit cards (4 June 2015) quoted that APRA Chairman, Wayne Byres, told senators in Canberra:

            Mr. Byres also agreed with Treasury, the RBA, and the Australian Securities and Investments Commission officials that there ought to be closer scrutiny of the interest rates banks are charging on their credit cards, because the current "spread" between the official cash rate and rates charged on credit cards was at record levels.

            "I understand the point fully that the margins on credit card business look very high, certainly to any other form of credit, and certainly I can't sit here today with an explanation of why that is," Mr Byres said.

            "Informing us all about that is probably a useful piece of work."

Post the APRA Chairman's above undertaking almost three years ago, to the merit of "Informing us all about that is probably a useful piece of work", what has the Council of Financial Regulators actioned to cap interest rates on Australia's  Highest Interest Rate Credit Cards?

1.         Below are extracts from the Productivity Commission's Draft Report titled "Competition in the Australian Financial System" dated Jan 2018 - 401 pgs - accessible at Competition in the Australian Financial System:

·         The institutional responsibility in the financial system for supporting competition is loosely shared across APRA, the RBA, ASIC and the ACCC. In a system where all are somewhat responsible, it is inevitable that (at important times) none are.

Rather, we need: regulatory settings that do not thwart competition between existing institutions; more customer-oriented providers that consider their existing customers (not just potential new customers); less of a blizzard of new but barely-distinguishable products with labels that obfuscate; much better and far more open information on product prices and conditions; and scope for consumers to more easily become unstuck (should they wish to be) from their current banks and insurers.

The financial system needs a competition champion

Competition in Australia’s financial system is without a champion among the existing regulators — no government agency is tasked with overseeing and promoting competition in financial markets, including forcing consideration of whether actions by regulators materially harm competition.  Under the current regulatory architecture, promoting competition requires a serious rethink about how the RBA, APRA and ASIC consider competition and whether the Australian Competition and Consumer Commission (ACCC) is well-placed to do more than it currently can for competition in the financial system. As a forum for coordinating input from financial system regulators on regulatory interventions, the CFR should be a key avenue through which consideration of competition impacts is promoted, analysed and made more transparent.

Shedding light on regulator decision making

As part of the broader adjustment in regulatory focus required, greater transparency around decision making by the financial regulators, including the CFR, is essential to ensure accountability and an active consideration of effects on competition.

As a first step in this process, and as a matter of priority for the Government, the Statements of Expectations for ASIC and APRA need to be updated from their 2014 versions and reported against annually. Such statements would provide financial regulators with the Government’s perspective on their strategic direction and most crucially, allow assessment after the fact to see if performance matched expectations. This draft report should influence those documents.

The decisions made at the CFR are profound in their impact on the financial system and the economy but there is no public transparency around them. Regulation has tended to err on the side of financial stability. Due to a lack of transparency, it is difficult to establish whether this approach is justified in all cases.

The CFR's consideration of competition analysis (and other market interventions) should be minuted and published, as the RBA Board meetings are. An assessment that analyses in depth the competition implications of a proposed regulatory intervention should be discussed at the CFR meeting prior to the intervention starting. Regulators should, in their Statement of Expectations, be required to consider amending policies to alleviate adverse impacts on competition."

2.        It is an indictment that Three Parliamentary Appointed Bodies That Regulate Financial Services that are bound to "act in the public interest" do not publish Minutes of the quarterly meetings of the Council of Financial Regulators which would provide an audit trail that these three regulators are, in fact, "acting in the public interest", particularly as the RBA Board Meetings are Minuted.  One ponders the reason.  Perhaps Dr. Norman Edey would assert that they sometimes discuss commercially sensitive matters, but Minuting discussions re information sharing regarding the Counsel's responsibilities, in particular "to discuss regulatory issues", should not be commercially sensitive.  And if it is, then we all have a problem with the efficacy of our Three Parliamentary Appointed Financial Services Regulates.

3.        The Writer emailed RBA_Info on Friday, 16 March 2018 4:57 PM asking where he could access the Minutes of the quarterly meeting of the non-statutory Council of Financial Regulators.  On 19 March RBA_Info informed that there are no published Minutes, but directed him to page 57 of RBA's Financial Stability Review - Oct 2017 titled Domestic Regulatory Developments.  Sadly, the word Credit Card or Credit Cards does not warrant a mention.  But it does contain a lot of impressive ACRONYMS.

4.        RBA's Financial Stability Review - Oct 2015 was the first meeting of the Council of Financial Regulators after APRA Chairman, Wayne Byres' below repeated undertaking to Senators on 4 June 2015:

                "Informing us all about that (the current "spread" between the official cash rate and rates charged on credit cards was at record levels) is probably a useful piece of work."

            Sadly, that "..... useful piece of work" failed to materialise at the quarterly October CFR meeting of Australia's three statutory appointed regulators. 

5.        Below is the only reference to Credit Cards in the RBA's Financial Stability Review - Oct 2015:

"In contrast, at around 2–3 per cent over recent years, write-offs on credit card debt and other personal lending have been higher, consistent with some portion of this lending being extended to borrowers with a relatively weak credit profile and on an unsecured basis. Although credit card and personal lending is riskier, it represents only a small share of banks’ total domestic loans."

The word 'competition' appears in the RBA's Financial Stability Review - Oct 2015 on 16 occasions.

The FSR discussed the following issues mentioning the word 'competition', but not about what APRA Chairman, Wayne Byres told senators "....is probably a useful piece of work."

• nominal housing price growth

• Funding and liquidity

• the owner-occupier part of the mortgage market and in parts of the business lending market.

• a further deterioration in banks’ asset quality in conjunction with slower rates of credit growth and the potential for net interest margins to narrow if the liberalisation of interest rates increases price competition for funding.

• Household and Business Finances

• competition in the owner-occupier lending market remains strong

• price competition for business lending

• mortgage lending insurance

• price competition for new and lower-risk owner-occupier borrowers

• competition for new large corporate loans

• cost of banks’ domestic deposit funding

• Profitability

• competition in the mortgage market and the housing price cycle

If the Royal Commission wants to understand why Australia's 'central bank' has never exercised its rights -

*         under Part 5—Miscellaneous, Section 26 of the Payment Systems (Regulation) Act 1998 to ask for financial data relating to a payment system, specifically to require the major Credit Card Issuers to provide comprehensive data on Interest & Penalty Fees revenue for all Credit Card Products for a minimum of 12 months; or

*        under Section 11(1) of the Reserve Bank Act 1959 to " ....inform the Government, from time to time, of the Bank's monetary and banking policy" having regard to its obligations under Section 10(2) 'Functions of Reserve Bank Board' of the Reserve Bank Act 1959  to "best contribute to.......... the economic prosperity and welfare of the people of Australia", specifically to re-regulate a maximum Purchase interest rate or a maximum Cash Advance interest rate or to adopt the User Pays Principle as the RBA recommended in Dec 2001 in Reform of Credit Card Schemes in Aust:  "A Consultation Document" and the Writer recommended in Section 8 of his letter (on CD) dated 8 Dec. 2011; or

*        under Division 4, Section 18 of the Payments System Regulation Act 1998 to set new Standards to cap the maximum interest rate on Purchases and on Cash Advances or to adopt the User Pays Principle as the Writer requested the RBA to do in Section 8 of his CD letter to the RBA dated 8 Dec 2011 - explained in Point 9 of Supporting Evidence re 1st Question above.
then look no further than Revolvers and Persistent Revolvers.

==================================================================================================

11th Question

Will the Royal Commission ask the Governor of the Reserve Bank whose Board is chartered under Section 10(2) 'Functions of Reserve Bank Board' of the Reserve Bank Act 1959 to "best contribute to.......... the economic prosperity and welfare of the people of Australia" to confirm that the Governor of the Reserve Bank is aware of the primary findings of the reports (published after 2005) from the Productivity Commission, the ABS and ASIC that measure and quantify the Financial Literacy Capacity of Australians that are ranked between as low as less than Level 1 up to Level 5, as set out in Chapter 1?

=================================================

Will the Royal Commission ask the Chair of ASIC that is bound by Part 1-Preliminary Division 1 Objects of the ASIC Act 2001 to -

*         "receive, process and store, efficiently and quickly, information that is given to us",

inform what action ASIC took to protect Financially Uneducated And Vulnerable Credit Cardholders that have poor Financial Literacy Capacity, after it published ASIC Report 224 "Access to financial advice in Australia"  in Dec 2010?

==================================================================================================

13th Question

Will the Royal Commission ask the Chair of the Council of Financial Regulators to provide a schedule of the respective responsibilities of the RBA, APRA and ASIC (and the clauses relied upon in their respective Acts listed at the top of this letter) that obligates each regulator to ensure competition amongst Credit Card Products which involves seeking information to establish that Credit Card Issuers are not engaging in Numeracy And Literacy Discrimination through Unconscionable Credit Card Advertising targeted at Credit Cardholders with low Numeracy and Literacy Skills?

=================================================

3.        Below is and extract from page 2 of ASIC's "Check Against Delivery" dated 6 March 2018 for the Productivity Commission Inquiry into competition in the Australian financial system: Hearings on draft report:

4.        Below is and extract from page 28 of the Government response to the Financial System Inquiry - Improving Australia's Financial System - 20 Oct 2015:

"The Government agrees with the Inquiry’s objective of strengthening the regulator accountability framework but does not support the creation of a new Financial Regulator Assessment Board.

We consider that new requirements in the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the Government’s Regulator Performance Framework provide avenues to strengthen regulator accountability along with other existing mechanisms such as Parliamentary hearings.

We will reconstitute the Financial Sector Advisory Council with refreshed Terms of Reference to include providing advice on the performance of the financial regulators by the end of 2015.

We support providing regulators with clearer guidance in Statement of Expectations and consider that the PGPA Act requirements are consistent with the Inquiry’s recommendation for increased use of performance indicators for regulator performance.

We will update the regulators’ Statements of Expectations in the first half of 2016, including providing a Statement of Expectations to the Payments System Board for the first time."

"In contrast, at around 2–3 per cent over recent years, write-offs on credit card debt and other personal lending have been higher, consistent with some portion of this lending being extended to borrowers with a relatively weak credit profile and on an unsecured basis. Although credit card and personal lending is riskier, it represents only a small share of banks’ total domestic loans."

==================================================================================================

14th Question

Will the Royal Commission ask the Governor of the Reserve Bank why its Payments System Board's 'Responsibilities and Powers webpage does not also list the Banking Act 1959 under legislation that governs the Payment Systems Board's responsibilities and powers?

=================================================

Section 50 of the Banking Act 1959 was relied upon to set deposit and loan interest rates upon commercial bank accounts, including capping Credit Cards @ 18% up until April 1985, as explained on page 13 and 14 of Reserve Bank Research Discussion Paper titled LOAN RATE STICKINESS: THEORY AND EVIDENCE  -  RBA 1992.   Credit Cards are Designated, deemed an Access Regime and Standards have been set by the RBA.  Hence, the ACCC's obligations were subrogated to the RBA.  If the Payments Systems Board was to ever set a Standard to regulate Credit Card interest rates, it would have to rely upon Part V—Interest rates  50 'Control of interest rates' of the Banking Act 1959.

The Banking Act 1959 contains the following references to the Payment Systems (Regulation) Act 1998):

Subdivision D—Administration

16AJ Requiring assistance

(1)     APRA may, by written notice given to any of the following persons, require the person to give APRA such reasonable assistance in the performance of its functions, and the exercise of its powers, under this Division as is specified:

         (a)     an ADI (whether or not it is a declared ADI);

         (b)     an administrator appointed under subsection 13A(1) to take control of an ADI’s business;

         (c)     a liquidator appointed in connection with the winding up, or proposed winding up, of an ADI.

(2)     Without limiting subsection (1), APRA may require a liquidator to assist APRA in APRA’s function of paying account holders their entitlements under Subdivision C.

(3)     For example, APRA may, by notice issued under subsection (1), require the liquidator to do the things specified in the notice, including:

         (a)     carrying on the business of the ADI so far as necessary, or doing any other act or thing, to facilitate APRA’s payment to account holders in accordance with Subdivision C; or

         (b)     seeking the re-entry of the ADI into a payment system (as defined in section 7 of the Payment Systems (Regulation) Act 1998); or

         (c)     transferring the entitlements of account holders to accounts held by the account holders in another ADI.

The Banking Act 1959 contains the following references to the Reserve Bank of Australia, in particular Part V—Interest rates  50 'Control of interest rates':

2 Commencement

Except as otherwise provided by this Act, this Act shall come into operation on the day on which the Reserve Bank Act 1959 comes into operation.

8 Only the Reserve Bank and bodies corporate that are ADIs may carry on banking business

11C Division not to limit operation of other provisions

Nothing in this Division is intended to limit the operation of any other provision of this Act or of the Reserve Bank Act 1959.

11CE Supply of information about issue and revocation of directions

Power to publish notice of directions in Gazette

(1)     APRA may publish in the Gazette notice of any direction made under Subdivision A or B or section 29. The notice must include the name of the ADI or authorised NOHC given the direction and a summary of the direction.

Requirement to publish notice of revocation of certain directions in Gazette

(2)     If APRA publishes notice of a direction made under Subdivision A or B or section 29 and then later revokes the direction, APRA must publish in the Gazette notice of that revocation as soon as practicable after the revocation. Failure to publish notice of the revocation does not affect the validity of the revocation.

Requirement to provide information about direction to Treasurer and Reserve Bank

(3)     If the Treasurer or the Reserve Bank requests APRA to provide information about:

         (a)     any directions under Subdivision A or B or section 29 in respect of a particular ADI or authorised NOHC; or

         (b)     any directions made during a specified period under Subdivision A or B or section 29 in respect of any ADIs or authorised NOHCs;

APRA must comply with the request.

16AE Advice and information for decision on making declaration

(1)     The Minister may give APRA, ASIC or the Reserve Bank a written request for advice or information about a matter relevant to making a decision about making a declaration under section 16AD (including a matter relating to the affairs of an ADI).

(2)     As soon as reasonably practicable after being given the request, APRA, ASIC or the Reserve Bank must give the Minister the advice or information about the matter.

(3)     In making the decision, the Minister must take into account the advice and information (if any) that he or she has been given before making the decision. This does not limit what the Minister may take into account in making the decision.

Part V—Interest rates

50     Control of interest rates

(1)     The Reserve Bank may, with the approval of the Treasurer, make regulations:

         (a)     making provision for or in relation to the control of rates of interest payable to or by ADIs, or to or by other persons in the course of any banking business carried on by them;

         (b)     making provision for or in relation to the control of rates of discount chargeable by ADIs, or by other persons in the course of any banking business carried on by them;

         (c)     providing that interest shall not be payable in respect of an amount deposited with an ADI, or with another person in the course of banking business carried on by the person, and repayable on demand or after the end of a period specified in the regulations; and

         (d)     prescribing penalties, for offences against the regulations, not exceeding:

                  (i)     if the offender is a natural person—a fine of $5,000; or

                  (ii)    if the offender is a body corporate—a fine of $25,000.

==================================================================================================

15th Question

Will the Royal Commission ask the Chair of the Council of Financial Regulators if it sought financial data from the primary six or seven Credit Card Issuers, that includes those issued by Citibank and Latitude Financial (nee G.E. Capital), that identifies the number, Outstanding Indebtedness and demography of Credit Cardholders that are Persistent Revolvers after the RBA quantified in Graph 7 of RBA Submission to the Senate Inquiry into Matters Relating to Credit Card Interest Rates - Aug 2015 the indebtedness borne by Persistent Revolvers?

==================================================================================================

16th Question

Will the Royal Commission ask the Chairman of the ACCC, Mr. Rod Sims, to examine the information in advertisements for Credit Cards (explained in the Nine Examples within Labyrinth of ‘Concealed Spiders’), with particular regard to obligations under the National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Act 2011, to determine if any represent Predatory Advertising or Unconscionable Conduct (based in the ACCC's description of (Unconscionable Conduct).

1.          ASIC is empowered to impose monetary penalties where Unconscionable Conduct is found to exist.

             The Royal Commission can recommend that the Council of Financial Regulators ban any marketing practices that the ACCC deems to be Unconscionable Conduct.

2.          Credit Card Issuers have since conjured up more Predatory Advertising to Target Credit Cardholders With Low Financial Literacy Capacity that continued unchecked by Two Of Australia's Three Financial Services Regulators

17th Question

Will the Royal Commission ask the Chairman of the ACCC, Mr. Rod Sims, if the below extracts from 'Conditions of use' booklets issued by St. George Bank, ANZ and Westpac with text in small fonts constitute Unconscionable Conduct?

*            St George Bank "We strongly recommend that you read this booklet carefully and retain it for your future reference" a 76 pages Conditions of Use - Credit Guide document of Conditions.  The word 'interest' appears in the 'Contents' twice and 78 more times throughout the 76 pages.  The word 'fee' or 'fees' appears 53 times.

*           ANZ's 'CONDITIONS OF USE 20.06.2016 CONSUMER CREDIT CARDS'  is a 97 page booklet printed in 9 font. Cardholders are requested to read voluminous parts of it as well as their Credit Card Contract.  The word "interest' appears 216 times in the booklet.  The word 'fee' or 'fees' appears 104 times.

*          "Ignite by Westpac - Consumer Credit Card Conditions of Use".  The word 'interest' appears in the 'Contents' once and 92 more times throughout the 43 pages.  The word 'fee' or 'fees' appears in the 'Contents' once and 74 more times throughout the 43 pages.  "This User Guide forms part of your Credit Card Contract, along with the information set out on the reverse of your welcome letter which advises you of your credit limit and other prescribed information we are required to give you by law."  Clause 17 is "Do I have any other rights and obligations?"  "Yes. The law will give you other rights and obligations. You should also READ YOUR CONTRACT carefully." 

==================================================================================================

18th Question

Will the Royal Commission recommend to the Three Financial Regulators that they use their existing regulatory powers to require all Credit Card Issuers to simplify their Credit Card Products so that their Credit Cards  'Conditions of Use' booklet, together with any Schedule/s referred to therein, do not exceed 50 pages in text no smaller than Arial 10?

*            CBA's 'Conditions of Use' credit card booklet  (dated 1 Nov 2017) is only 13 pages, although it does refer to a "Schedule of Credit Card particulars in your Offer Letter". 
CBA's 'Easy guide to credit card fees and charges' dated 23 March 2018 is only two pages.  

==================================================================================================

19th Question

Does each of the Four Pillars reducing their low interest credit card by 5% circa in recent months, amidst the prospect of a Royal Commission, evidence that the Four Pillars that issue 80% of Credit Cards used in Australia, were uncompetitive during the Council of Financial Regulators 'watch', when each of the RBA, ASIC and APRA have regulatory obligations to the australian public to ensure real competition amongst Credit Card Issuers?

Below is and extract from page 2 of ASIC's "Check Against Delivery" dated 6 March 2018 for the Productivity Commission Inquiry into competition in the Australian financial system: Hearings on draft report:

Too early for banks to pat themselves on the back over credit card changes  -  SMH  - Clancy Yeates  -  29 October 2017

==================================================================================================

20th Question

Will the Royal Commission recommend that Reward Programs be banned?

Rewards Programs constitute tax evasion because benefits received can be measured as 'income' or 'cash outlays avoided', but such receipts are not income taxed.

Rewards Programs discriminate against Financially Uneducated And Vulnerable Credit Cardholders that Lack Financial Acumen often due to poor Financial Literacy Capacity identified and quantified by the Reserve Bank as Persistent Revolvers.

Credit Card Products informs inter alia that the humble means of obtaining a 'Product' and/or a 'Service' on credit, by presenting a Credit Card to a Merchant, now renders those plastic cards to be the most differentiated product in the Western World for the simple reason of Credit Card Issuers maximising their profits amidst a diverse range of Financial Literacy Capacity and inadequate laws/regulations.

Merchant Service Fees ranged between 2.2% and 0.8% in 2013 because, as noted in Credit Card Products, with some -

*        Citi Select Premium Credit Cardholders paying a $700 Annual Cardholder Fee to receive 70,000 'bonus Reward Points' and a welter of income tax avoidance gifts ; and

*        American Express Platinum Business Charge Card holders paying up to $1,500 Annual Cardholder Fee to receive up to four (untaxed) Reward Points for every dollar expended.

==================================================================================================

21st Question

Will the Royal Commission recommend to the Three Financial Regulators that they use their existing regulatory powers to ban Credit Card Issuers paying third party credit card websites such as the following from marketing in any way, shape or form their Credit Card Products because such advertisements are often misleading and deceptive and targeted at Credit Cardholders with low Financial Literacy Capacity as quantified by the Productivity Commission and the ABS in Chapter 1?

• www.finder.com.au/creditcards 

• www.creditcardcompare.com.au

• www.creditcard.com.au

• www.canstar.com.au/credit-cards

• www.mozo.com.au/credit-cards 

• www.canstar.com.au/credit-cards

• www.infochoice.com.au/credit-cards

• www.ratecity.com.au/credit-cards

• www.infochoice.com.au/banking/credit-card

• www.iselect.com.au/credit-card

 On 8 Dec 2011 the Writer posted three CDs to Ms. Sharon van Etten at the RBA that opened at his letter to the RBA dated 8 Dec 2011 (Reference B listed at top of this page) titled:

 *           Request to the Reserve Bank of Australia, hereinafter the RBA, to implement the same "competitiveness and efficiency" that it has overseen in the 'wholesale supply side' of the debit and credit cards products to the Retail Supply Side of credit cards, because banks profits from credit cards are not derived from the User Pays Principle

 *           All users should pay the cost of their credit card transactions, and not some "unlucky" users paying a disproportionate burden which has further gapped the "Haves" from the "Have Nots" 

 

Below is an extract from Section 1 titled 'Summary of eight Attachments' of the Writer's letter to Ms. Sharon van Etten at the RBA dated 8 Dec 2011:

  "Attachment 'H' titled All Smoke and Mirrors provides an unfortunate testament of the prudential role performed by the Reserve Bank -

   (i)        entrusted to be banker and financial agent for the Commonwealth; and

   (ii)       with a charter to protect "....the economic prosperity and welfare of the people of Australia".

   if CreditCards.com (parent site of australia.creditcards.com) is being paid by some or all of Our Bank/Issuer Partners (ANZ, Aussie, Bank Mecu, Bankwest, citi, NAB, St George, Virgin, Westpac) for providing links to those banks' websites credit card products at , because some like NAB's Low Interest Credit Card, Bank mecu's Low Interest Rate Credit Card and Bankwest's Breeze MasterCard are patently deceptive.

          Hence, Attachment H criticised the RBA for allowing www.australia.creditcards.com to advertise Credit Cards on behalf of Our Bank/Issuer Partners that included ANZ, citi, NAB, St George and Westpac. 

          A few months later www.australia.creditcards.com  and  www.creditcards.com ceased to display any advertising for Credit Cards offered in Australia.  There is another website,www.creditcard.com.au (without an 's' on creditcards) with a different logo.

2.       The only party that should make representations about the respective benefits, or costs, of a Credit Card, which is a material financial 'borrowing instrument' available to Australian's with poor Financial Literacy Capacity, should be the Credit Card Issuer.  Removing the above 'web platform sellers' should reduce the delivery costs of Credit Card Issuer and avoid a lot of misinformation and deception.  Due to the internet, together with more traditional media (newspapers, radio and TV), there are ample media options available to Credit Card Issuers to advertise their own Credit Cards.

==================================================================================================

22nd Question

Will the Royal Commission recommend to the Three Financial Regulators that they use their existing regulatory powers to ban any Credit Card Issuer offering Balance Transfer Interest Free or Very Low interest Offers which are seeking to 'poach' Financially Uneducated And Vulnerable other bank Credit Cardholders that Lack Financial Acumen because Persistent Revolvers contribute pay 80% circa of all Interest and Penalty Fees Revenue generated from Credit Card Products.

1.         Balance Transfer Interest Free Period Offers details the history of some Credit Card Issuers' Predatory Marketing Practices which included until 1 July 2012 the now outlawed 'Order of Payments' Allocation Practice.  These particular Credit Card Issuers, presently led by Citibank, portray themselves as altruistic saviors, yet they engage in Numeracy And Literacy Targeting of Credit Cardholders that possess level 1 (or below) and level 2 Financial Literacy Capacity that are often Persistent Revolvers that frequently pay Usurious Unsecured Interest Rates which is contrary to the RBA's parliamentary decreed role to "best contribute to.......... the economic prosperity and welfare of the people of Australia" pursuant to Section 10(2) 'Functions of Reserve Bank Board' of Reserve Bank Act 1959.