Government’s response to Murray Financial System Inquiry Report

The Government has released its response to the Murray Financial System Inquiry Report. The Government Response has accepted all but 1 of the Murray Financial system Inquiry’s 44 recommendations.(Background).

The Government does not agree with the Inquiry’s recommendation to prohibit limited recourse borrowing arrangements by superannuation funds.

The response sets out an agenda for action in the next year.

The actions agreed to by the Government include:

  • The Government agrees that the capital ratios of Australian banks should be unquestionably strong. It will support and endorse APRA as Australia’s prudential regulator to implement this recommendation.
  • The Government will develop legislation which provides a professional standards framework for financial advisers.
  • The Government agrees to support industry efforts to implement the comprehensive credit reporting (CCR) regime, but will not legislate for mandatory participation at this stage.
  • The Government will phase in a legislated ban on surcharges that exceed the reasonable costs faced by merchants in accepting cards. It will also make the ACCC responsible for enforcing the ban on excessive surcharging.
  • The Government agrees to provide ASIC with a financial product intervention power to enable it to modify, or if necessary, ban harmful financial products where there is a risk of significant consumer detriment.
  • The Government agrees with the need to clearly differentiate financial products. It supports APRA improving product differentiation for retail consumers while at the same time noting that the sensitivities of potential adjustments for particular sectors will need to be considered.
  • The Government agrees to rename ‘general advice’ to improve consumer understanding. It will consult with a wide range of stakeholders and conduct consumer testing before finalising the new term. It will also develop legislative amendments to ensure that financial advisers and mortgage brokers adequately disclose their relationships with associated entities.
  • The Government will develop legislative amendments to amend the definition of a basic deposit product in the Corporations Act 2001. These amendments will provide certainty for businesses and consumers by clarifying how certain term deposit products are treated under the law.
  • The Government agrees to support industry-led initiatives, including supporting specific proposals put forward by industry, to increase guidance and disclosure in general insurance.
  • The Government will support the retail life insurance industry’s proposed reforms as announced by the then Assistant Treasurer on 25 June 2015. The Government will consider the extent to which legislation and/or action by ASIC may be necessary to implement the industry agreement.
  • The Government agrees to develop a regulatory framework to facilitate crowd-sourced equity funding through the 2015-16 Budget.
  • The Government will develop legislative amendments to provide greater certainty for private ancillary funds wishing to invest in social impact bonds.
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