Whichever major party forms Government next week, the large banks will be required to contribute to funding for customer compensation and services.
In its April Budget, the LNP Government announced (Budget Paper 2, page 167) that an industry-funded compensation scheme of last resort for consumers and small business will be established.
The cost of this measure will be partially offset by revenue received through ASIC’s industry funding model and increases in the APRA Financial Institutions Supervisory Levies and from funding already provisioned in the Budget.
Labor’s “Fair Go Budget Plan”, released last week, states that a Labor Government will create a Banking Fairness Fund which will provide community services that support victims of bank misconduct.
The Fund will be created through a Banking Fairness Fund Levy which will raise projected revenue of $619 million over the four years to 2023. Commencing in 2019-2020 the annual levy will be $105 million, $198 million, $158 million and $158 million.
Labor will require the nine biggest banks in Australia, those listed on the ASX 100, to contribute proportionally by market capitalisation to support community services, including organisations which provide assistance to victims of banking misconduct.
The Banking Fairness Fund Levy will be in addition to the existing Major Bank Levy which since 1 July 2017 has imposed a levy of 0.015 percent of each affected bank’s licensed entity liabilities each quarter (0.06 percent per annum) on all Authorised Deposit-taking Institutions (ADIs), foreign and domestically-owned, with greater than $100 billion in licensed entity liabilities.
