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Tuesday, 25 March 1997
Page: 2413

Senator KEMP (Assistant Treasurer)(6.38 p.m.) —Senator, it originally stems from the election promise.

Senator Sherry —What was the reason for the electorate promise?

Senator KEMP —It was after widespread consultation, presumably for the very good reasons I have stated: for example, that banks may wish to offer longer term products. In other words, they may wish to offer a fixed term of 12 months. There seems to be some logic that they would have a 12-month period for a longer term product which offered a longer term rate, and presumably a higher term rate. I know I will never convince you, Senator Lundy, so you can save yourself from even shaking your head. That is the basis of it, Senator.

I think we want to avoid any misunderstanding that this allows RSAs to wait until 12 months. It will depend on the particular product which is offered. I stress that that will have to be disclosed. Longer term RSAs will presumably have a longer notice period. I do not think that is unreasonable at all. Shorter term RSAs will have a shorter notice period, which is entirely appropriate. This will put a limit on. It is not meant to provide a prescriptive instruction that all RSAs can wait until 12 months to hand the money back; that is not the case at all. The notice period will be part of the disclosure requirements which will be set out when people establish an RSA.