For anyone who has been affected by unscrupulous financial advisors, dodgy financial products or highway robbery in the form of credit card charges, the measures announced this week by the Federal Government to clean up the country’s financial system (“to best meet our evolving needs and to support Australia’s economic growth”) will be especially welcome.
A couple of days ago, the Federal Government finally released its response to the Financial Systems Inquiry’s Final Report aimed at cleaning up and improving our financial system . The FSI’s Final Report had actually been delivered to the government on 7 December last year so peak policy and advocacy body for older people, COTA Australia, was quite entitled to describe the response as ‘long awaited’.
In their joint media release, the Prime Minister, Malcolm Turnbull and Minister for Small Business and Assistant Treasurer, Kelly O’Dwyer said that the Government has accepted “the overwhelming majority of the Inquiry’s recommendations”. It has also promised six additional measures that they say, “will help to deliver a financial system that is efficient, resilient and fair.”
So what’s in it for us?
Among the suite of commitments and consumer protections the Government has announced are:
- Initiatives to improve the level of competition, efficiency and transparency in the superannuation system.
- Regulations to raise the professional standards and requirements of financial advisors including requiring minimum qualifications, a professional code of ethics and more regulated terms of practice.
- Increased accountability for issuers and distributors of financial products;
- Power to ASIC to intervene to modify or ban financial products that are harmful to consumers;
- Improved financial product disclosure measures and protections;
- Agreement to review the efficiency and effectiveness of the superannuation system and support the development of comprehensive retirement income products; and
- A ban on unfair credit card purchase surcharges.
What’s not in it?
What’s not in it, according to COTA, is the devilish detail relating to those improvements in retirement incomes and superannuation.
And the reason for that is most likely the fact that the Government is reviewing and developing its response to retirement income regulation (Retirement Income Streams Review) in a separate process which was expected to be announced at the same time as its response to the FSI report (back in August, actually).
So it’s interesting that one has been announced without the other.
COTA has been lobbying the government for a comprehensive Retirement Income Streams Review for the last couple of years, arguing that policies around superannuation, taxation and pensions should be reviewed and developed together, not in a separate piecemeal way, to ensure the development of a retirement incomes system that is fair as well as sustainable in the long term.
“Only an independent expert review of all the policies in play, looking at the winners and losers and sustainability of existing policies, and canvassing the range of new ideas put forward by academics, interest groups and others over the last couple of years, will give Australia a strong foundation on which to build our future,” Mr Yates said in a statement in May 2014.
So, while Mr Yates now politely welcomes a number of the super-related elements in the government’s promises as ‘encouraging’ – the agreement to legislate the objective of superannuation in legislation; to review the efficiency and effectiveness of the super system; and to support the development of comprehensive retirement income products – he will have to wait longer for the release of the also long awaited Retirement Income Streams Review and the Tax White Paper process’s Options Paper.
The same goes for those of us close to retirement and considering our fortunes (or otherwise). Watch this space.
Read the Government’s full response to the Financial Systems Inquiry here by clicking on this link.
