We have made a submission to the Australian Government on the final recommendations of the Financial System Inquiry (FSI).
We support the Report’s recommendations to improve outcomes for customers, noting in particular the importance of measures dealing with competency of financial advisers, facilitating better product disclosure and fostering innovation in the provision of financial services.
We also agree with the Report’s conclusion that our banks should be unquestionably strong. Capital is one indicator of strength but it is also important to consider regulatory supervision, a bank’s financial performance, balance sheet composition, liquidity, management performance and business model.
Australian regulation will also be impacted by recent proposals from the Basel Committee on Banking Supervision (referred to as Basel IV) which may have wide-ranging implications for how banks manage capital, quantify and manage risk, and price their products. In our view, the FSI’s recommendations relating to capital should not be implemented before there is clarity about what Basel IV means for Australian banks.
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