Regulation Impact Statement Updates

Official website for publishing regulatory impact analysis information for regulatory decisions announced by the Australian Government, COAG and COAG Councils.

Government’s Response to the Financial System Inquiry

Aust Gov
10th February 2016

Independent Review – The Treasury

On 20 October 2015, the Government released its response to the Financial System Inquiry, which was established in late 2013. The Financial System Inquiry Final Report was released on 7 December 2014. The Financial System Inquiry made recommendations relating to financial system resilience, superannuation, innovation, consumer outcomes and regulatory systems. Key recommendations that the Government’s response agreed with were to:

  • require banks to hold in various forms more money in reserve;
  • allowing greater use of digital communication in place of letters;
  • reducing the need to support historical legacy financial products;
  • require financial advisers to be registered by a board and with higher minimum qualifications; and
  • cap upfront commissions on life insurance sales.

The Government did not agree with the Inquiry’s recommendation to prohibit superannuation funds from borrowing directly to invest in property. Consistent with the Government’s Regulation Impact Statement requirements the Financial System Inquiry report was certified by the Treasury as an independent review that followed a similar process to a Regulation Impact Statement. The Office of Best Practice Regulation (OBPR) does not assess independent reviews. The Treasury estimated that requiring financial advisers to be registered by a board and with higher minimum qualifications would increase regulatory burden by $165 million per annum. In addition, allowing greater use of digital communication and reducing the need to support historical legacy financial products would reduce regulatory burden by $180 million and $223 million per year respectively. In total, the Treasury estimated that the net reduction in regulatory burden from the Government’s response was $167 million per year. The OBPR agreed to these estimates. The process followed by the Treasury in meeting the Government’s Regulation Impact Statement requirements was consistent with best practice.

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