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Treasury urged to exercise caution on proposed draft bill to regulate non-ADI commercial lenders

Banking & Finance
Treasury urged to exercise caution on proposed draft bill to regulate non-ADI commercial lenders
Arnold Bloch Leibler has made a submission to Treasury’s request for stakeholder views on the exposure draft of the Treasury Laws Amendment (Non-ADI Lender Rules) Bill 2017.

The ABL submission argues the following key points:

  • The non-ADI lending sector has been and continues to be vital in helping to provide competition and liquidity in the Australian property finance and SME Borrower market.
  • Increased oversight and regulation of the sector by the Australian Prudential Regulation Authority ("APRA") may assist in promoting financial stability, but over-regulation could have serious consequences for the property sector and the economy overall.
  • If APRA is granted new powers, APRA must use them in a focused and measured manner, targeting areas of the market that are likely to pose systemic risks, without restricting much-needed non-ADI lending activity in the current market.
  • While APRA and Treasury have indicated that the new power over non-ADI lenders is intended to be a "reserve power", this is not consistent with the wording of the Draft Bill.
  • If the Draft Bill becomes law, the industry must be given an opportunity to provide feedback on the potential adverse consequences of any proposed rules affecting the sector.