The government’s response comes more than 10 months after the release of the final FSI report in December 2014.
The response, posted on the Treasury website, lays out a series of measures via which the government will strengthen the resilience, superannuation outcomes, innovation, consumer outcomes and regulation of the financial system.
A joint statement by Treasurer Scott Morrison and Assistant Treasurer Kelly O’Dwyer said the government has accepted the “overwhelming majority of the inquiry’s recommendations”.
“Our response also includes six additional measures that are consistent with the inquiry’s underlying philosophy,” said the statement.
On superannuation, the government pledged to develop and enshrine the objective of the superannuation system by the end of 2016.
“[We will also] consult on legislation to facilitate trustees of superannuation funds providing pre-selected comprehensive income products for retirement [by end-2016],” said the government.
Beyond 2016, the government will introduce “director penalties”, as well as “consult on legislation to improve member engagement, consistent with the recommendations in the inquiry [and] monitor leverage and risk within the superannuation system”.
By the end of 2015, the government will develop legislation to improve governance and transparency in superannuation; progress the Retirement Income Streams Review; and task the Productivity Commission to immediately develop and release criteria to assess the efficiency and competitiveness of the superannuation system and to develop alternative models for a formal competitive process for allocating default fund members to products.
On the regulation of the financial system, the government will complete the capability review of ASIC by end-2015.
By mid-2016 the government pledged to update the Statement of Expectations for APRA, ASIC and the Payments Systems Board.
By the end of 2016 the government said it would “introduce competition into ASIC’s mandate”. Beyond 2016, the government will “commence a review of ASIC’s enforcement regime”.
On the resilience of the financial system, the government said it would consult on measures to ensure financial regulators “have the tools they need to manage any future financial crisis”.
By the end of 2016 the government will require APRA to take additional steps to ensure Australian banks have ‘unquestionably strong’ capital ratios; and beyond 2016 the government will require APRA to ensure Australian banks have appropriate total loss-absorbing capacity and leverage ratios in place.
When it comes to innovation, the government pledged to consult on legislation to support crowdsourced equity funding and crowdsourced debt financing by the end of 2015.
By mid-2016 the government said it would develop legislation to ban excessive card surcharges and better protect consumers using electronic payment system; develop legislation to reduce disclosure requirements for ‘simple’ corporate bonds; and establish an ‘Innovation Collaboration Committee’.
By end-2016 the government pledged to give legal effect to the Asian Region Funds Passport initiative, as well as “consider technology neutrality in financial sector regulation”.
Beyond 2016, the Turbull government will “facilitate rationalisation of life insurance and managed investment scheme legacy products”.
On financial advice, by mid-2016 the government said it would develop legislation which provides a professional standards framework for financial advisers; as well as consult on development of accountabilities for issuers and distributors of financial products and ASIC product intervention powers.
By end 2016 the government said it would develop legislation to give ASIC the power to ban individuals from managing financial firms; and consult on strengthening ASIC’s enforcement tools in relation to the financial services and credit licensing regimes.
Beyond 2016, ASIC will be tasked with reviewing stockbroking remuneration arrangements.
