Consumer Action welcomed the panel’s interim report, particularly that fairness, as much as stability and efficiency, are important objectives for the financial system. We strongly support the panel’s comments at page 3-50 that the financial system must meet the following five outcomes if it is to meet customer needs:
- Consumers should have access to products and services that help them meet their financial needs;
- Consumers should have access to the information, advice and education necessary to make effective decisions;
- Consumers should have confidence and trust in the financial system and be able to expect fair treatment;
- Financial services and products should meet the purposes for which they are sold; and
- Consumers should have access to timely, low-cost and efficient dispute resolution and remedies.
Consumers expect the financial system to be based on mutual trust, so that financial promises are delivered in accordance with their needs and expectations. From the consumer perspective, this means that financial system should deliver financial products that are simple, safe and fair. It also means that sales and distribution methods (including product disclosure and financial advice) should be honest, clear, free of conflicts of interest and of high quality.
We also submit that financial products and services need to deliver consumers real value. That is, consumers should be sold only the financial products that they need; financial products sold should be proportionate to the degree of risk a consumer is in a position to bear; and both financial products and their distribution should be based on minimum conduct standards. Markets should be based on effective, fair and responsible competition to create incentives for businesses to improve and further benefit consumers.
Our particular concern is for low-income, vulnerable or financially disadvantaged consumers. For these groups, an ‘error of judgment’ in the modern financial marketplace can have far-reaching consequences for their financial and general wellbeing. While not all risk can be ameliorated, the financial system should promote fairness and offer adequate protection for vulnerable consumers.
A full copy of our submission is available by clicking: Financial System Inquiry Interim Report.