Council of Financial Regulators to report on competition reforms for small and medium-sized banks by 1 July and publish updated Charter in July

The Council of Financial Regulators (CFR) issued its quarterly statement following its 11 June meeting, highlighting a risk environment shaped by rapid shifts in international trade policy, global market volatility and heightened geopolitical tensions, and reiterating its focus on strengthening crisis preparedness across the Australian financial system. Although domestic markets have continued to function without significant dislocation, the CFR noted that liquidity conditions were affected in April and that markets remain vulnerable to further shocks. It pointed to strong capital and liquidity as key buffers, while stressing the need for financial institutions to maintain shock-absorption capacity and enhance preparedness for geopolitical, operational and system-wide liquidity shocks. The CFR also received an update on its review into small and medium-sized banks with the Australian Competition and Consumer Commission, discussing potential competition-supporting policy changes including greater proportionality in some regulatory areas and measures to facilitate entry, sustainability and growth, alongside monitoring of housing-related risks should lending standards weaken as financial conditions ease. The CFR plans to provide its final report on the small and medium-sized banks review to the Government by 1 July 2025, including recommendations and agency commitments. Separately, it is reviewing its Charter and related crisis management memorandum of understanding, which it expects to publish in July.