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Suncorp Group Limited Annual Report 2010/11 7

In December 2010 the Federal Government announced its proposed reforms to promote a competitive and sustainable banking system. Key features of the announced reforms, called the Competitive and Sustainable Banking System, included prohibiting exit fees on new home loans from 1 July 2011, introducing a mandatory key facts sheet for new home loan customers, amending the Competition and Consumer Act 2010 (previously called the Trade Practices Act ) to give the Australian Competition and Consumer Commission power to prosecute price signalling, allowing ADIs to issue covered bonds and confrming the Financial Claims System (FCS) as a permanent feature of Australia’s fnancial system. The legislation to ban home loan exit fees was passed in the frst half of 2011, with effect from 1 July 2011.

Further amendments have been proposed to the Competition and Consumer Act prohibiting price signalling by ADIs. The Federal Government is consulting on the FCS, on the amendments proposed to the scheme by the Council of Financial Regulators (comprising the Reserve Bank of Australia, APRA, the Australian Securities and Investments Commission and Federal Treasury) in respect of ADIs. Key recommendations include lowering the current $1 million cap to between $100,000 and $250,000 per depositor per ADI, from October 2011.

Consultation continues on the second stage of the national consumer credit lending reforms following on the implementation of the national consumer credit protection legislation in 2010. The legislation codifed existing State Uniform Consumer Credit Codes, and introduced new licensing and responsible lending requirements and expanded regulation of credit to individuals for residential property investment purposes. The second stage consists of further disclosure requirements for consumer credit lenders in respect of home loans and credit cards (the home loan and credit card key fact sheet) and regulation in respect of reverse mortgages, consumer leases, National Credit Code enhancements and short‑term small amount lending. The Federal Government is working with industry on fnalising legislation to establish a regulatory model under which ADIs will be allowed to issue covered bonds. The Bank continues to work on and understand the impacts arising from the Personal Property Securities Act 2009 , a national law which will regulate lending secured over personal property interests.

The report of the Cooper Review of Australia’s

superannuation system was released in December 2010. The Federal Government released the Stronger Super package which contained its response to the recommendations of the Cooper Review of Australia’s superannuation system. The Government’s response is expected to signifcantly impact superannuation in Australia with key proposals such as replacement of existing default funds by a new low cost simple superannuation product called MySuper.

The Federal Government also released an Information Pack called ‘Future of Financial Advice 2011’ in April 2011. The key reforms proposed include a prospective ban on up‑front and trailing commissions and like payments for both individuals

and group risk within superannuation from 1 July 2013 and the formulation of the proposed statutory ‘best interests’ duty which would require fnancial advisers to act in the best interests of their clients and give priority to their clients’ interests and take reasonable steps to discharge that duty. APRA continues consultation on the Level 3 supervision of conglomerates proposals and expects to fnalise and implement those proposals by the second quarter of 2013. National uniform occupational health and safety laws are expected to start in January 2012.

Federal Government consultation continues on the proposed reforms to Australia’s privacy laws with proposed new privacy principles and credit reporting reforms having been released for public consultation.

All of these prudential, regulatory and other proposals or enquiries will or could impact the Suncorp Group’s respective operations in banking, general and life insurance. Outcomes of other Government or regulatory reviews, including into the taxation system and Australia’s clearing and settlement systems, and various reforms proposed or already implemented for various Federal and State judicial systems, could also impact the Suncorp Group’s operations. The New Zealand regulatory environment is undergoing signifcant change with the introduction or implementation of key pieces of legislation including for the areas of insurance law, fnancial services and consumer law.

The Insurance (Prudential Supervision) Act 2010 (IPSA) requires virtually all insurers to be licensed by the Reserve Bank of New Zealand. Insurers are required to hold a provisional licence by 7 March 2012 and a full licence by 7 September 2013. Applications have been submitted for the Suncorp Group’s New Zealand businesses. Insurers will need to comply with the IPSA while operating under a provisional licence, to the extent provided for in that licence.  Once fully licensed, they will need to comply with a number of ongoing requirements, as well as any conditions imposed on their licence by the Reserve Bank of New Zealand. The Financial Service Providers (Registration and Dispute Resolution) Act 2008 (FSP Act) and the Financial Advisers Act 2008 require compulsory registration and participation in a dispute resolution scheme and for fnancial advisors to adhere to minimum standards.

The ASX Corporate Governance Council (Council) introduced changes to the Corporate Governance Principles and Recommendations (2nd edition) on 30 June 2010. These included new recommendations relating to diversity that apply to a listed entity’s frst fnancial year commencing on or after 1 January 2011. Council encourages early implementation for the reporting year commencing 1 July 2010. 

In early 2011, the Board approved the Equal Employment Opportunity (EEO) and Diversity Policy and also endorsed the Diversity Strategy Plan 2011–14, including measurable objectives to achieve gender diversity. The EEO and Diversity Policy is available on the Suncorp Group website.