Consumer protection focus of Turnbull Government response to Murray Inquiry – October 2015

Filed under: Australian Politics, Banking, Finance, Financial Regulation, Financial System Inquiry,

The Turnbull Government has announced key consumer protection measures in its response to the Murray Financial Services Inquiry.

In its first substantial policy move since the change in Liberal leadership, the Government accepted most of the report’s sweeping recommendations which covered the security and operations of the banking system, consumer protection, superannuation, financial planning, financial regulation, technological innovation in financial markets and capital markets.

Under the consumer protection measures the Government says it will legislate so that merchants will not be allowed to charge surcharges for using credit, debit or EFTPOS cards beyond the cost to the business of accepting payment by card. The Australian Competition and Consumer Commission (ACCC) will enforce the regulations to ensure consumers are treated fairly and not overcharged.

Its approach on this issue is likely to be politically popular but conflicts with a more deregulatory approach proposed by the Financial Services Inquiry

The government is also promising action to improve the standards of financial advice, an area that in recent years has been subject to extensive malpractice and controversy, amid deep concern especially from retirees.

However it rejected a key recommendation to stop Self-Managed Superannuation Funds from borrowing, particularly to fund property investment.

The Murray inquiry handed its report to the Abbott Government in December. It had been listed to be considered by the Abbott cabinet in its final meeting in September, which was cancelled because of Mr Turnbull’s leadership challenge. It was one of the areas where the Abbott Government was criticised for failing to adequately address difficult but important policy challenges.

Consumer protection measures which the Government announced were:

  • Fees and surcharges: The government will phase in a ban on excessive card surcharging, and continue to watch developments to decide whether further action is needed.
  • Financial Advice: The government will introduce laws to raise professional standards of advisors by mid-2016 and in 2019 consider whether more changes are needed.

The surcharge decision goes against the Financial System Inquiry's view that it would be too costly and impractical for a regulator to decide what each merchant's true payment costs are.

More than 5000 of the 6500 final submissions to the Murray inquiry were on surcharging. This was prompted by a campaign by Gold Coast businessman Klaus Bartosch. Visa and MasterCard have been pushing for bans on surcharging and a regulator to be given power to enforce limits for years.

To improve the financial advice industry, advisers will have to have a degree, pass an examination, undertake continuous professional development, subscribe to a code of ethics and undertake a professional year before they can advise clients. There will be some transitional arrangements as the tougher requirements are put in place. The Senate had thwarted some – but not all – attempts by the Abbott government to water down the Labor government’s more stringent for financial advisers.

On other areas:


  • Capital requirements: The government has backed APRA's moves to increase bank risk weights to offset mortgage risks, and agreed to take an active an ongoing “role in monitoring developments” on this front.
  • Risk management: The government will consult with the industry to “clarify and strengthen” regulatory powers to manage crises.
  • Bank deposit tax: The government has backed the Murray inquiry's recommendation not to introduce a levy to fund the taxpayer guarantee of bank deposits.


  • Define purpose of superannuation: The government will enshrine in law the “fundamental purpose” of the super system to create a “yardstick” against which competing proposals for change are held up to scrutiny.
  • Default superannuation funds: The government will task the Productivity Commission to look at alternative ways of allocating default funds to savers, including a regular national competition among super providers.


  • APRA and ASIC Funding: The government will consider calls to adopt a three-year funding model.
  • Regulatory Review: The government will reconstitute the Financial Sector Advisory Council to report back on performance of regulators by end of 2015.
  • Financial competition: The Productivity Commission will review the state of competition in the financial system by end of 2017, require regulators to use annual reports to explain how they have “balanced competition with other elements of their mandates”, and push for Asian Region Funds Passport legislation in the second half of 2016.

Using new technology in financial services

  • Crowd-source funding: The government will consult with the community on crowd-sourced debt funding as well as legislation. (Announced in 2015 Budget)
  • Financial data access: The government will task the Productivity Commission with improving access to data but will not mandate reporting into the comprehensive credit reporting regime.
  • Retail bond market: The government will assess the need for further improvements that would support the retail corporate bond market.

Additional actions adopted by the Government not recommended by the Murray inquiry

  • Develop laws in second half of 2015 to ensure participation in international derivatives markets.
  • Develop laws to boost retail consumer protection for money held in derivatives.
  • Amend the Corporations Act to amend the definition of a basic deposit product.

Further Reading