Chair of the Financial Systems Inquiry, David Murray, presents the Financial System Inquiry Interim Report at the National Press Club in Canberra, Tuesday, July 15, 2014.
Chair of the Financial Systems Inquiry, David Murray, presents the Financial System Inquiry Interim Report at the National Press Club in Canberra, Tuesday, July 15, 2014. AAP Image - Lukas Coch

Inquiry finds financial advice sector isn't good enough

THE Abbott government's inquiry into Australia's financial system has found the quality of financial advice is not up to scratch, despite the sector overall operating well.

The inquiry's chairman, former Commonwealth Bank chief executive David Murray, released an interim report of the inquiry's progress on Tuesday.

While it made no specific recommendations, the report has highlighted several issues needing improvement, including in superannuation, financial advice and regulators.

>> Read the Interim report here (460 page PDF)

It found that despite most areas of the financial system "operating effectively", confidence in the sector was essential to limit the impacts of any future financial crises and deal with the ageing population.

And as Labor and The Greens seek support for a disallowance motion on the government's "watering down" of financial advice laws, the inquiry had its own issues.

The interim report highlighted significant issues with the quality of financial advice and found current interest disclosure rules did not "enhance consumer understanding" of financial products.

It also observed that improving the standards of advisor competence and "removing the impact of conflicted remuneration can improve the quality of advice".

A second issue, raised in the report, was that regulators such as the Australian Securities and Investments Commission, could improve their oversight of the sector.

The report was released before a second stage of public consultation, before a final report is given to Treasurer Joe Hockey in November.



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