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Consumer Action welcomes the opportunity to contribute to the Financial Systems Inquiry. The submission below responds to the Inquiry’s terms of reference released on 20 December 2013.

The submission has three parts:

 Part 1, which considers developments since the 1997 Wallis inquiry, including:

• effective and positive aspects of the financial system, including consumer redress and dispute resolution, responsible lending in consumer credit, and the effect of standards of fairness in consumer contracts; and
• gaps and areas which need closer consideration, such as insurance, fringe lending and newer business models purporting to ‘assist’ consumers experiencing financial difficulties.

Part 2, which considers essential underpinnings of a well-functioning financial system, including:

• the role of empowered consumers in driving efficient market outcomes;
• the role of innovation in meeting consumer needs and wellbeing;
• effective financial sector regulation, particularly when it is based on a proper understanding of consumer behaviour; and
• the role, approach and responsiveness of regulators.

Part 3, which considers emerging opportunities and risks, and particularly the rise of “big data”, including:

• the way in which consumer data is used to improve business profitability, and the risks this creates for consumers;
• the possibilities of consumers accessing their own data, so it can help them make product choices aligned with their needs, sending better signals to suppliers; and
• reforms to payments systems, and the need to focus on end-users.

A full copy of our submission is available by clicking: Financial Systems Inquiry Terms of Reference.