'Financial Services Inquiry: Submission' (to the Australian Government, March 2014) (With Dr Ulysses Chioatto)

Abstract

This submission addresses some of the terms of reference of the Financial System Inquiry (FSI). These terms of reference are extremely broad and can cover a range of issues from the financial services regulatory framework to the superannuation rules. This broad review can ‘offer a blue print for the financial system over the next decade.’ However, we submit that the current financial system does not need radical change as the regime has great potential. It has allowed Australia to survive the Global Financial Crisis with minimum negative impact on the economy. However, cracks in the system are getting more pronounced and need to be remedied.As the foundation of a great financial system is already in place, we recommend that some of the key areas that should be reviewed and enhanced to improve the current cost, quality and availability of financial services and products are:- The financial service licensing regime – We recommend that harmonisation of the financial services licensing regimes takes place;- The retail and wholesale distinction – We recommend a review of the retail clients definition and a harmonisation with the consumers’ definition under the Australian Securities and Investments Commission 2001 (Cth);- The disclosure relevant to the issue of financial products – We recommend a simplification of the disclosure regime regarding financial products and services; and- The limitations for effective remedies and compensation – We recommend an enhancement to the compensation regime and other relief available to retail clients to ensure the available remedies are more accessible to retail clients