The Australian financial services industry is poised for a major overhaul, with the federal government accepting almost all of the recommendations included in the Murray Inquiry.
While the small business sector was not a key focus of the Financial System Inquiry, led by David Murray, there are key parts of the government’s response to the inquiry that will affect SMEs and their employees.
Here are eight things you need to know about the government’s response to the Murray Inquiry.
1. Credit card surcharges
Retailers have been quick to welcome the government’s move to adopt stricter measures when it comes to credit card surcharges.
The government has chosen to adopt the Murray Inquiry’s recommendation to introduce a ban on excessive customer surcharges on card payments.
The government will give the Australian Competition and Consumer Commission the task of ensuring excessive charges are not levied on consumers and a payments system board will also be implemented to work on improving intercharge fees.
Superannuation and retirement was a key area of focus for the Murray Inquiry and the government has agreed to adopt several recommendations in this area.
The Murray Inquiry recommended the government introduce a “formal competitive process” to govern how default super fund members are allocated to MySuper products.
In response, the government said it will ask the Productivity Commission to assess the efficiency and competitive of the current system and subsequently develop alternative models for allocating default super fund members to products.
3. Self-managed super funds
Some SMSF trustees will be pleased to see the government reject the Murray Inquiry’s proposal to ban SMSFs from borrowing to buy property.
While Treasurer Scott Morrison has said there is not enough evidence at this point in time to support an immediate ban, he said regulators will be asked to monitor SMSF borrowing closely and report back to government.
4. Financial advice
Work has already been underway for some time on several aspects of the financial system that were examined by the Murray Inquiry and one of these areas is financial advice.
The Murray Inquiry recommended the government raise the “competency” of financial advice providers and the government has agreed to develop legislation to “raise the professional, ethical and educational standards of financial advisers”.
It will do this by bringing in requirements that financial advisers hold degrees, pass an exam, undertake ongoing professional develop and subscribe to a code of ethics.
The government said it will amend the recently introduced register of financial advisers to “clearly identify whether individuals meet the new standards and whether there are relevant bans, disqualifications or code breaches applicable to that individual”.
5. Unfair contracts and crowdfunding
Two other areas covered by the Murray Inquiry in which the government has already been making changes involve provisions to protect small businesses from unfair contract provisions and crowdsourced equity funding models.
Former small business minister Bruce Billson had been leading the charge in both these areas and the government has re-affirmed its commitment to pushing ahead with these changes.
6. Innovation collaboration committee
In line with Prime Minister Malcolm Turnbull’s innovative agenda, the government has agreed with the Murray Inquiry’s recommendation to establish a permanent Innovation Collaboration Committee.
“Innovation is critical to unlocking productivity improvements in the financial system. However, emerging firms and startups often struggle to find a way of engaging with government. A permanent innovation committee will provide this point of entry,” the government said.
7. Corporate administration and bankruptcy
The Murray Inquiry recommended the government consult with industry on possible amendments to the external administration system “to provide additional flexibility for businesses in financial difficulty”.
The government agrees in principle but said this work falls under the Productivity Commission’s current inquiry into the barriers to business set and closure, which handed down its draft report in May.
8. ASIC funding and powers
The Murray Inquiry recommended the government introduce an industry funding model for the Australian Securities and Investments Commission, as well as providing the corporate watchdog with stronger powers.
The federal government has already released a consultation paper about a proposed industry funding model for ASIC and has invited public submissions.
The government has also agreed to grant develop legislation to grant ASIC stronger enforcement tools when it comes to financial services and credit licensing regimes.
These tools would give ASIC the ability to approve changes of licensee control; apply a broad range of factors when deciding if an applicant should be given a license and impose conditions on companies to “address concerns about internal systems relating to serious or systemic conduct”.