Hello and welcome, everyone, to the Australian Bankers Association Financial Literacy Conference for 2016.
Although I'm not able to join you in person today, I wholeheartedly support the important work the ABA and the industry are doing on the financial literacy front.
Empowering Australians to understand and engage in their financial wellbeing is of critical importance to the Turnbull Government.
We believe that informed consumers are confident consumers, and confidence in our financial system is crucial in terms of both stability and growth.
Financial literacy is therefore a critically important component of our fast-evolving financial landscape.
Helping Australians to improve their understanding of financial products and services to make informed decisions for their future is important.
Our National Financial Literacy Strategy now in its second phase, and financial literacy embedded in schools, and the strategic approach taken by the Australian Government makes us an international leader.
In the most recent OECD Programme for International Student Assessment results, Australia ranked equal third out of 18 participating OECD countries and economies in financial literacy.
Australia's result is similar to New Zealand, and significantly ahead of the United States.
With Australian students being exposed to financial literacy education at school through the Australian curriculum, it's no surprise. And it's hugely encouraging to see them engaging with financial products and services from a young age. In fact, we now see 82 per cent of students with a bank account and 73 per cent earning money from work.
Indeed, the Coalition has a long-standing commitment to improving the financial literacy of all Australians, which dates back to the Howard Government's decision to make financial literacy a priority. And, as you know, there are several industry and Government programs that aim to more broadly raise consumer confidence and engagement in financial services as well.
A key element of the Turnbull Government's continuing commitment to financial literacy is ASIC's MoneySmart website.
This award-winning site had over 6 million visitors and over 4.7 million uses of the site's financial calculators, including 950,000 uses of the Budget Planner, over 2015/16.
Our research tells us that 88% of visitors to the MoneySmart website find it useful or very useful. Most importantly, 90% of visitors to MoneySmart take positive steps in relation to their finances, which is a great outcome.
Today, I am delighted to launch a new addition: MoneySmart's Simple money manager.
Simple money manager has been designed to give even more Australians the ability to develop their financial knowledge and skills.
A free online budgeting tool, it's aimed at helping Australians take control of their daily finances and is now translated into eight languages, including in-language audio.
I commend ASIC in developing this tool and making financial literacy accessible, user-friendly and informative.
There are some great things happening in financial literacy.
But, we also need to keep working hard to ensure that our financial system framework enables fair treatment of consumers when they're being sold financial products and services.
We only need to look to recent history to find a number of examples of product and advice failures that has led to a reduction in trust and confidence in the sector.
The circumstances of each case differ, but there's obviously a problem when commercial incentives override consumer interests.
Let me spend the remainder of my time talking about some of the work the Turnbull Government has done to help broaden and consolidate the financial literacy of consumers.
I have already mentioned ASIC's Simple money manager, but more broadly across Government, we're implementing several consumer outcome measures aimed at giving consumers the confidence to participate in the financial system, knowing they will be treated fairly.
- The Turnbull Government will provide a $127.2 million reform package to equip ASIC with stronger powers to enhance surveillance capabilities, which will help them to combat misconduct in Australia's financial services industry and will also at the same time bolster consumer confidence in the sector.
- We're consulting on strengthening ASIC's enforcement tools in relation to the financial services and credit licensing regime; and we're improving the accountability of issuers and distributors of financial products, including a new product intervention power for ASIC that will be used to modify or, if necessary, ban the sale of harmful products.
- We are also consulting on and developing legislation to enable innovative disclosure for financial products.
- The Government will further ensure remuneration structures in life insurance, and financial services more broadly, don't adversely affect the quality of advice consumers receive.
- And very importantly, we will lift the education, training and ethical standards of financial advisers.
The Turnbull Government believes that by raising the professional standards of financial advisers, we will improve consumer trust and confidence in the financial services sector. You will recall that both the FSI and the Parliamentary Joint Committee on Corporations and Financial Services recommended this.
It's only by improving trust in the industry that consumers will confidently seek advice.
That's why these reforms will require financial advisers to hold a degree or equivalent higher qualification, undertake a professional year, pass an exam, undertake continuing professional development, and comply with a code of ethics.
We'll establish a standards body to develop the education and training requirements for new and existing advisers.
And we'll also make enhancements to the Government's Financial Adviser Register, such as ensuring financial advisers display their principal place of business, whether they're undertaking a professional year, which compliance scheme they subscribe to, and whether any breaches of the Code or sanctions have been imposed.
Enhancements like this provide a mechanism for accountability and transparency, and will help consumers make informed decisions when choosing their financial adviser. So not only do reforms of this kind improve the quality of advice and rebuild consumer trust, they also help industry take important steps to professionalise, whilst minimising the compliance burden for the industry.
And, to make sure that these reforms will work well, we've consulted widely with industry, consumer groups, and other stakeholders in their development.
Let me, at this point, acknowledge the role the ABA has played in these reforms to date, particularly in driving consensus through the Industry Consensus Group, which also included the AFA, Choice, FPA, FSC, ISA and SMSFA.
I look forward to your strong continued involvement as we finalise these reforms.
The Turnbull Government also welcomes your intention to work with us and your members to increase consumer protections, increase transparency and accountability, and build trust and confidence in banks.
The ABA's six-point plan is focused on important and challenging issues for the sector, and it is a great example of an industry-led initiative.
Appointing customer advocates in each bank is also an important step towards improving customer-handling processes.
All of these initiatives – in conjunction with the Government's broader reform agenda – will help to protect and support consumers and businesses.
I know they will go a long way towards forging a strong Australian financial system that has integrity.
In closing, let me once again commend everyone here today for your commitment to financial literacy. A financially literate community means opportunity for all — and I know we are all working hard to make that happen.