Australia’s growing regulatory requirements are beginning to squeeze small business out of insurance work and prevent families from accessing finance.
Speakers at today’s Queensland Futures Institute 2024 Finance Summit said, while the burgeoning red tape was well-intentioned, it was having negative flow-on impacts.
Suncorp Group CEO Steve Johnston said there were growing requirements on insurance supply chain companies to provide reporting on things like cyber resilience, climate policies and human rights.
This was “absolutely directionally the right thing to do” but the requirements went beyond the capacity of the small businesses like “backyard motor vehicle repairers” that were a critical part of the insurance supply chain.
“I really do worry that we are going to shorten these supply chains up and concentrate them in a number of bigger players because its easy for us to get certification for them quickly,” he said.
“Many of them (the suppliers) are not going to be in Queensland and many are not going to be in Australia.
“The practical application of some of these…processes has to be managed very carefully or we run the risk of really shortening up our supply chains and driving our suppliers into a very small number of global providers.”
People First Bank CEO Peter Lock said it was important for regulators to have a coordinated approach to seeking company information and he hoped “cooler heads will prevail” on the appropriate amount of regulation.
He said regulation that went too deep would run counter to competition in the banking sector.
Regulators were “overegging it a little” and the result could be that small banks could not operate in the environment and ordinary people could not access finance.
“(It) comes down to accessibility,” he said. “That’s a problem. It’s becoming more and more difficult for ordinary Australians and ordinary Queenslanders to get access to finance because of the level of inquiry, the fear of getting it wrong, the fear of fines.
“It is stifling what should be good and sensible financial decisions.”
ANZ Group General Manager for Communications and Public Affairs Tony Warren said careful consideration needed to be given to where the regulatory line was drawn.
He said a road system with a 5km/h speed limit would be safe, but it would have other negative consequences.
Similarly, it was hard to have a banking system that was “perfectly safe and no one ever loses” because it created “all the snarl at the other end”.
“There is no right answer here” he said. “It’s always going to be a pendulum.
“How do we get that right so we get money into start-ups, we get money into businesses and we get money into first home buyers without overcompensating but doing it in a way that gets the economy running again.”
Dr Warren said there was a “cultural norm” in the industry to run a very low risk for good reason, but it may come at a very high cost.
