The FSI referred to studies undertaken after natural disasters revealing inadvertent underinsurance due to consumers struggling to make an informed decision about the sum insured. Survey results highlight that even when consumers take the time to read insurance documentation, including the product disclosure statement, many misunderstand it, scan it briefly due to over-reliance on sales
The FSI has recommended that the competency of financial advice providers be raised and an enhanced register of advisers introduced.
The Government is currently considering mechanisms to raise minimum education requirements for financial advisers and the FSI recommends that this be prioritised.
The FSI found that the minimum standards are currently too low which affects
The FSI identified the need to better align the interests of financial services providers with those of consumers to ensure better consumer outcomes.
The following strategies have been recommended to address some underlying issues:
The FSI has recommended that ASIC be granted a product intervention power to enable it to take a more proactive approach to reducing the risk of significant detriment to consumers. Specifically, this new power would allow the regulator to intervene to require or impose:
The FSI shares concerns raised by ASIC that consumers are buying products that do not match their needs. The existing regulatory framework relies heavily on disclosure, financial advice and financial literacy. However, disclosure can be ineffective for a number of reasons, such as complexity of documents and misaligned interests. The FSI also considers that current
The release of the final report of the Financial Systems Inquiry (FSI) brings us a step closer to a significant shift in conduct regulation in Australia.
As we have previously reported, Australia seems set to join a UK and European trend away from regulation driven by disclosure towards an approach where product providers bear
The Murray Inquiry asserts that Australia’s financial system has performed well since the Wallis Inquiry and has many strong characteristics. But it also has a number of weaknesses: taxation and regulatory settings distort the flow of funding to the real economy; it remains susceptible to financial shocks; superannuation is not delivering retirement incomes efficiently; unfair
On Sunday 7 December 2014 the Federal Treasurer, Mr Joe Hockey, released the Final Report of the Financial System Inquiry (or ‘Murray Inquiry’ after its Chair, David Murray) having received it at the end of November in accordance with the Terms of Reference. The Inquiry was established by the Treasurer in December 2013 to review
The widespread introduction of legislation protecting the actions of ‘whistleblowers’, and increased public expectations of global corporate accountability, mean that businesses need to adopt a proactive approach to managing allegations or disclosures that point to misconduct within their organisation. Not understanding the law surrounding whistleblowing can be costly for businesses in terms of potential claims
Incentivising whisteblowers could be an easy first step for the Australian Government if it were to heed the call by the recent Senate Economics References Committee for a more pro-active approach to fraud.
Currently, Australia has no incentivised whistleblower programs. The prospect of a reward for whistleblowers would see a sharp rise in the number