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Govt responds to Financial System Inquiry

The government has this morning announced it will accept all but one of the 44 recommendations made in David Murray’s Financial System Inquiry, rejecting the recommendation for a ban on SMSF borrowing.

News Michael Masterman 20 October 2015
— 1 minute read

In its official response, the government said it does not agree with the inquiry’s recommendation to prohibit limited recourse borrowing arrangements by superannuation funds.

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While the government acknowledged anecdotal concerns about limited recourse borrowing arrangements, it said that at this time it does not consider the data sufficient to justify significant policy intervention.

The government will, however, commission the Council of Financial Regulators and the Australian Taxation Office to “monitor leverage and risk in the superannuation system and report back to Government after three years”.

“This timing allows recent improvements in ATO data collection to wash through the system. The agencies’ analysis will be used to inform any consideration of whether changes to the borrowing regulations might be appropriate,” an official statement said.

All other recommendations were accepted, including raising the competency of financial advisers.

“The Government agrees to develop legislative amendments to raise the professional, ethical and educational standards of financial advisers by requiring advisers to hold a degree, pass an exam, undertake continuous professional development, subscribe to a code of ethics and undertake a professional year,” the response from Canberra said.

“The details of the new standards will be set by an independent, industry funded body, which will be recognised in legislation. The Government will consult on appropriate transitional arrangements for existing advisers,” it said.

“The Government will introduce legislation to raise the professional standards of financial advisers by mid-2016.”

Govt responds to Financial System Inquiry
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