The RBA Gets Punitive: Penalties Recommended for Delaying New Payments Platform Participants

By Jim Bulling and Charles McDonald

On 13 June 2019, the Reserve Bank of Australia (RBA) released its paper into the New Payments Platform’s Functionality and Access (Paper). In it, the RBA expressed disappointment with the slow roll out of New Payments Platform’s (NPP) services and functionality. As a consequence, the RBA will continue to push the major banks to prioritise the roll-out of services to their customers to address functionality gaps as quickly as possible. The Paper also recommends that NPP Australia Ltd (as operator of the platform) should:

• introduce powers for its board to mandate that certain core capabilities be functional by a specified date; and
• that this power be coupled with an “enforceable sanctions regime” to penalise non-compliance.

NPP Australia for its part welcomed the RBA’s Paper. However, NPP Australia did not comment on any possible sanctions regime, preferring to focus on the growing volume of transactions that the NPP is handling. A more comprehensive public response from NPP Australia is expected in July of this year.

The publication of the Paper comes with open banking on the horizon. Speaking to the Australian Financial Review, the Hon. Jane Hume, recently appointed as Australia’s first Fintech Minister, has put preparations for the roll-out of open banking to the top of her immediate agenda. However, given the widespread and disruptive reforms already underway in the banking sector following the Royal Commission, the Minister alluded to a more cautious timeline for that full roll-out.

It will be interesting to follow the effects of the dual disruption of the NPP and open banking to the Australian Banking landscape. It is safe to say that both the RBA and Government are charting a course towards a banking system that can handle instantaneous transactions for all users and more extensive data rights for consumers.