THE NEWS WRAP: Regulatory reforms should open up credit card market competition

A move by the Reserve Bank to reform credit card regulations is likely to open up new competition by shifting oversight for credit card issuers away from banking regulator Australian Prudential Regulation Authority.

The reforms will likely mean companies will no longer need to register as a bank in order to issue credit cards, with analysts saying the move is likely to open up competition in the sector.

“The issue with the access arrangements currently is that they’re quite restrictive. Companies essentially need to be an authorised deposit taking institution, a bank,” BIS World senior analyst Caroline Finch told the ABC.

“Banks are under a lot of regulation so this has been a significant barrier to entry, particularly to foreign players, and for anybody who’s not already a bank it’s quite hard to get yourself registered as a bank.”

Alan Joyce defends Qantas job cuts

Qantas chief executive Alan Joyce has defending plans to slash jobs at the airline during a Senate hearing late last week.

“I absolutely believe that the Qantas staff are in the need for the company to change and know that the best way to secure as many jobs in the Qantas group is to have a successful, profitable business going forward,” Joyce told the Senate inquiry.

“We have to make, I will say again, some tough decisions. It is not easy having to make 5000 people redundant.”

Super pressure grows on small funds

The pressure on superannuation funds is growing, with smaller funds overseeing less than $5 billion in assets increasingly being pushed to merge or be swallowed up by their larger competitors.

According to Financial Services Council chief executive John Brogden, the federal government’s introduction of the MySuper scheme and reforms to SuperStream were pushing compliance costs beyond the reach of many smaller funds.

“Most of the pressure is coming from government changes, whether they be the cost of changing internal processes or adopting new IT systems,” Brogden says.

“The smaller funds will have a lot of pressure on them to prove that they’re viable beyond the next two or three years. The smaller you are, the more pressure is going to be on you.”

Overnight

The Dow Jones Industrial Average closed down to 16065.7 points. The Aussie dollar is down to US90.04 cents.