A Positive and Ambitious Government Response to Financial System Inquiry

PwC partner and financial services leader Julie Coates said the Federal Government’s response to the Financial System Inquiry Report was encouraging, with some of these measures expected to be extended over time.

“The financial services sector is closely linked to Australia’s growth performance so it’s encouraging to see nearly all the recommendations by David Murray and his team adopted,” Ms Coates said.

“There’s quite a lot to get done in a short period of time – a number of actions are set for completion by the end of 2016.

“We are particularly encouraged by the endorsement of measures around innovation and the need to make Australia a competitive place to do business.”

Ms Coates said she was surprised the Government did not adopt one measure prohibiting borrowing by super funds.

“The argument from the Murray group is that the household sector is already heavily leveraged.

“In that context it makes sense not to add to the leverage given the important of retirement income. We are supportive of that. It’s still on the table and we suspect in time the change will resurface.”

Regarding measures around bank resilience Ms Coates said: “There’s no real surprises here – the government is adopting the steps that APRA foreshadowed and the banks are already making moves to respond to this. Adopting these measures gives certainty to banks and the market.”

“The broader actions to improve the competitiveness, efficiency and transparency of Superannuation are welcome,” Ms Coates said.

“They recognise the significance of superannuation to Australia’s economic and social future and the definition of its purpose in law is a critical first step.

“It’s also encouraging to see the Prime Minister endorse the inquiry’s recommendations in legislating and giving regulators more hands on power to put consumer outcomes first.

“The capping of credit card surcharges, and reforms to advisor professional standards have been foreshadowed for some time.”

About Prof Janek Ratnatunga 1129 Articles
Professor Janek Ratnatunga is CEO of the Institute of Certified Management Accountants. He has held appointments at the University of Melbourne, Monash University and the Australian National University in Australia; and the Universities of Washington, Richmond and Rhode Island in the USA. Prior to his academic career he worked with KPMG.