The Reserve Bank of Australia

13th July 2011

The Reserve Bank of Australia

Dear Sir/Madam,

RE: Submission to RBA relating to transfer of funds between institutions. .

I am writing in relation to the, to me, anomalous situation whereby it takes at least two (2) working days to clear a payment made with BPAY, by credit card or direct transfer. Fortunately, like many people today, I do not use a cheque book otherwise I would have to wait up to five (5) working days for clearance.

At least 50% of the payments I make – and the funds I receive – are made one line, via the internet, which operates (as the saying goes) 24/7. The internet, as you are aware, with the introduction of the NBN (National Broadband Network) is about to get a whole lot faster than the current ADSL2+.

I am therefore puzzled as to why payments take such a long time to clear. I presume that financial institutions neither turn off their computers at 5.00pm on a Friday, (and turn them on again at 8.00am on a Monday), nor do they need to physically check every transaction made. Why, therefore, the delay? Why therefore the old, outdated, 9 to 5 shop hour mentality? Why not record all transactions in real-time? Financial institutions either don’t know the reasons or they won’t tell me what they are.

My particular gripe concerns a payment I had to make via BPAY. I use Bankwest and commenced a transaction using BPAY at about 6.30pm on a Friday evening. On checking my on-line statement I saw that the payment had, immediately, been recorded as being made on the following Monday – two days later! On the Monday I contacted Bankwest to find out why and was told that the problem lay with BPAY. On contacting BPAY I was told that the problem lay with my bank – so I was back where I started from, still frustrated – even though I commend Bankwest for recording their part of the transaction so timeously.

I, again, contacted Bankwest to try and clarify the matter and was, this time, told that all transactions were governed by regulations set by the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investment Commission (ASIC). I then contacted APRA and was politely told that inter-financial institution transactions had nothing to do with them but was the preserve of the Reserve Bank of Australia (RBA) and the Australian Payments Clearing Association (APCA). I did not bother contacting ASIC.

When I contacted the RBA, they, without saying so in so many words, gave me the impression that inter-financial institution transactions were set by convention, not regulation, hence their current review of financial payment clearing practices and hence this submission to that review.

I am still awaiting a response from APCA.

In summary I submit the following:-

• Will the RBA please revue current practices and the time taken to clear financial transactions, in any form, and recommend that, in the future, these be recorded in real time.

Yours faithfully,

Andrew Campbell-Watt