Financial industry compliance regulators will soon have the power to require financial institutions to report how they manage risk and manage the amount of money they hold.
The Australian Securities and Investments Commission has announced the new rules, which require banks to publish on their websites the risks they are managing and the amount they hold, and to publish the risk level of each type of account.
“It’s a really important change that will make it easier for the consumer to understand what financial institutions are doing in the market,” the regulator’s director of regulatory affairs, Rob Walker, said.
The rules are also designed to help customers understand how they can minimise the risk of a bank’s failure.
They will also be used to increase the accuracy of bank financial data, which has been a source of controversy, due to the financial industry’s lack of transparency.
“It will allow consumers to get a clearer understanding of what they’re getting into,” Mr Walker said.
“For example, if they are paying with cash, or if they have an overdraft, then they’ll be able to see what kind of money is on there and how much it’s holding.”
The Australian Financial Services Union said it welcomed the regulator setting a high bar for how much information should be available on a bank.
“The new rules should ensure that consumers are able to get the information they need to make informed financial decisions, and are not deterred by financial institutions’ lack of disclosure,” the AFSU’s chief executive, Tim Carmody, said in a statement.