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Organisations in Australia react to Financial Systems Inquiry
The government's response to the Financial System Inquiry covered some key changes, but how have organisations responded to the suggestions?
The Financial Systems Inquiry has spurred growth in mutuals.
The government's response to the Financial Systems Inquiry covered a wide scope of parties, promising to build a stronger system for all Australians.
As organisations continue to release their responses, how will prospects for finance jobs change in the wake of the inquiry?
Mutuals sector to benefit from new measures
The sector grew by 7.4 per cent in the year ending June 2015.
Australia's credit unions, building societies and mutual banks all showed a strong performance in the year ending June 2015. According to KPMG's recent Mutual Industry Review for 2015, this particular sector grew by 7.4 per cent, double the rate seen in the previous year.
National Mutuals Leader for KPMG Australia Peter Russell explained that the outlook for this group is looking strong for 2016.
"Mutuals have a huge opportunity to harness the benefits of transformational change now emerging in the industry and with their capital well above minimum levels have the ability to grow the sector by over 25 percent," he said.
"Customer-owned institutions are well placed due to their size and nimbleness to seize a competitive advantage by implementing new technologies and ideas, collaborating with fintechs."
One of drivers of strong performance among these groups was increased competitiveness as a result of the Financial Systems Inquiry. However, KMPG stated that further measures are needed to ensure mutuals have support in trying times and address securitisation by increasing credit control.
Reforms will bring improvements to life insurance system
In a recent release, Assistant Treasurer Kelly O'Dwyer highlighted some key areas of change for the life insurance sector.
Starting from July 2016, the government will introduce a two-year retention period of 100 per cent of income in the first year and 60 per cent in the second. Other measures include a decrease in up-front commissions, falling to 60 per cent by 2018.
Ms O'Dwyer believes that the changes will lead to better interactions between firms and consumers and long-term improvements to the system.
Risk manager's scope extends past regulatory concerns
As highlighted in a recent speech, Chairman of the Australian Securities and Investments Commission Wayne Byres stated that risk management professionals will have an important role to play in building a new financial system.
At the recent Global Risk Forum in Hong Kong, he explained that the industry needs to look for improvements beyond regulations. This includes developing better tools to deal with unexpected incidents, improved liquidity and capital acquirement in banks and counter-cyclical measures to limit future excesses.
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by Andrew McPherson