The Federal Government has released its much-anticipated response to the recommendations of the Financial System Inquiry (FSI) made in December 2014. In its response, the Government largely accepts the majority of the FSI recommendations and outlines its agenda for implementing the recommendations in stages over the coming years. The notable exception is the Government’s rejection of the proposal to prohibit limited recourse borrowing by superannuation funds, stating that it ‘does not consider the data sufficient to justify significant policy intervention’.
The Government’s response is based on the following broad agenda items:
- Strengthen the resilience of the financial system: the resilience measures aim to reduce the impact of potential future financial crises by ensuring we are better able to weather them and lessen their cost to taxpayers and the economy.
- Improve the efficiency of the superannuation system: the superannuation and retirement incomes measures aim to improve the efficiency and operation of the superannuation system and in doing so boost retirement incomes.
- Stimulate innovation in the financial system: the innovation measures will unlock new sources of finance for the wider economy and support competition.
- Support consumers of financial products being treated fairly: the consumer outcomes measures are designed to give consumers confidence to participate in the financial system and the confidence that they are being treated fairly.
- Strengthen regulator capabilities and accountability: the regulatory system measures aim to make regulators more accountable for their performance, more capable and more effective.
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