Date issued: 7 December 2014

CPA Australia chief executive, Alex Malley, today welcomed the release of the Financial System Inquiry report and its blueprint for Australia’s financial system over the next decade.

Mr Malley said it was evident that the Committee had listened to the overwhelming view that while the financial system had withstood many of the challenges of the past, now is no time for complacency.

“In our submissions we urged this review to be as bold as its predecessor, the Wallis Inquiry, in going beyond simply examining the issues facing Australia’s financial service sector today and looking to enhancements that will lift the competitiveness of the financial services sector for the future.

“David Murray has done an excellent job, and today’s report addresses some of the fundamental issues facing Australia’s financial system and signposts some of the critical work that needs to be done.”\

“The inquiry has rightly recognised that globalisation and technology has changed the face of many Australian industries, none more so than financial services.

“Operating in a seemingly borderless world with financial transactions happening 24 hours a day 7 days a week is both a risk and an opportunity which impacts all of us.

“Advances in technology will continue to transform the global financial services sector and the recommendations of the Committee will help us look ahead and prepare for this now.

“Recommendations for allowing the development of crowdfunding options for businesses to access, the establishment of a new 'innovation collaboration' and an emphasis on removing unnecessary regulatory impediments to innovation all have the potential to help business proposer.

“Just as New South Wales announced it will be establishing an official renminbi clearing bank in Sydney, we are continuing to open up to global competition and we need to ensure we are best placed to capitalise on these changes.”

Mr Malley said that a central consideration for the inquiry has been sustaining confidence in our financial system. For consumers one of the key areas where confidence needs to be addressed is in Australia’s financial advice sector.

“For some time we have advocated for an increase in the education and competency standards for personal advice, as well as possible enhancements to clearly define and delineate ‘financial planning advice’ and financial product advice.

"It is welcome that the report calls for the raising of the overall "competency" of financial advice providers, not just the minimum level of knowledge.

“The recommendation for ASIC to be given a new temporary product intervention power is also worthy of the Government's consideration.

“When we consider superannuation and see a pool of funds now topping $1.8 trillion, we need to make sure that these funds, and their owners - the mums and dads of Australia - are protected.

“For superannuation, an area that still lacks proper consideration is the decumulation phase. We are simply living longer and for many of us, despite having a good superannuation nest egg, there is the very real possibility that we will outlive our savings.

“The inquiry has identified a need for a clear objective for our super system to be set and enshrined in legislation. This is particularly welcome, as is the emphasis on improvements to the retirement phase of superannuation.

“There is a very real emerging problem for Australia’s financial system when the growing pool of retirees start taking out their funds,” Mr Malley said.

CPA Australia’s submission called for the establishment of MyPension, a system linked to MySuper which could offer retirees a regular income stream in retirement with the option of taking a lump sum if needed.

“Just as MySuper makes the accumulation phase easy, MyPension could provide a low cost, flexible approach to decumulation, helping Australian’s ensure they can maintain their lifestyle for their whole retirement.”