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Australia government says credit a priority in bank inquiry response
[SYDNEY] The Australian government will prioritise keeping credit flowing through the economy when it responds to a landmark report into misconduct in the financial sector that will be released next week, Treasurer Josh Frydenberg said on Friday.
In an opinion piece in the Australian Financial Review, Frydenberg said the government's focus would be on ensuring consumers were properly protected, while also considering the broader implications for the economy.
The year-long Royal Commission has rocked the industry with its revelations and contributed to a system-wide tightening of credit by banks trying to pre-empt the regulatory response.
It will deliver its report on Friday, which the government will review and then release to the public after the close of share market trading on Monday.
"The government's principal focus is on restoring trust and confidence in our financial system," Frydenberg said.
"The government will also consider the broader implications for the provision of credit. We must ensure affordable and accessible access to finance for households and businesses. The free flow of credit is critical to the health of the economy."
Analysts expect the inquiry will recommend tougher enforcement of responsible lending laws, requiring banks to be more thorough in checking a borrower's ability to repay debt.
That has raised some concerns of a possible credit crunch, which Prime Minister Scott Morrison said he wanted to avoid.
"I will be very mindful that I want to see the oil that lubricates our financial system - which is access to credit - continues to flow, otherwise the consequences would be quite significant," Morrison told the Sydney Morning Herald.
The report comes as Australia's A$7 trillion (S$6.85 trillion) residential property is suffering its biggest downturn in a generation, with home prices in Sydney down by more than 10 per cent from their 2017 peak.
Analysts also expect the Royal Commission to recommend civil and criminal prosecutions for unwarranted or excessive fees, reform of overly lenient regulators and an overhaul of incentive structures for executives.