The Australian government is to hand new powers to the country’s financial services regulator, after a review of the country’s financial system found that consumers are often treated unfairly.
The financial system inquiry said in its final report to the government in December 2014 that “unfair consumer outcomes remain prevalent and policy settings do not focus on the benefits of competition and innovation.”
In its response to the inquiry published last week, the government said it would “introduce legislation to make sure the issuers and distributors of financial products are accountable for their offerings” and develop “a new product intervention power” for the Australian Securities and Investment Commission (ASIC).
ASIC will be able to use this power to “modify products, or if necessary, remove harmful products from the marketplace.”
The government aims to implement this by mid 2016.
It also wants to draw up legislation to “give ASIC the power to ban individuals from managing financial firms” as well as “consult on strengthening ASIC’s enforcement tools in relation to the financial services and credit licensing regimes.”
ASIC will also review remuneration arrangements in the mortgage broking industry, the government’s report states.
To strengthen the accountability of its regulators, the government will review its objectives for ASIC and the Australian Prudential Regulation Authority (APRA), which regulates banks, insurance companies, superannuation funds, credit unions, building societies and friendly societies, by providing “additional guidance about the government’s expectations for their strategic direction and performance.”
The government in its report pledged to complete a capability review of ASIC by the end of this year, “enhance capabilities of regulators as appropriate” by mid-2016, and start a review of ASIC’s enforcement regime after 2016.
In their foreword to the report, Australia’s treasurer Scott Morrison MP and assistant treasurer Kelly O’Dwyer MP wrote that the government’s programme will enhance the country’s financial sector, which “is the largest in our economy, having contributed $139 billion over the past year and employing around 400,000 Australians.”