The Commonwealth Bank of Australia (the Group) has today lodged its final submission to the Financial System Inquiry.

The Group was pleased to submit its initial recommendations – ‘Wellbeing, Resilience and Prosperity for Australia: Financial System Inquiry’ (First Submission) – to the Inquiry in March 2014.  This final submission provides responses to the July 2014 Financial System Inquiry Interim Report (Interim Report), and serves as a companion document to the First Submission.

The Group welcomes the opportunity to work with the Inquiry to develop constructive ideas and tangible outcomes to address the opportunities and challenges faced by the financial system. 

Many observations in the Interim Report such as the priority of customer wellbeing and system resilience in competition, funding, stability, superannuation and technology positively reflect the Group’s views. In some areas, Commonwealth Bank has a different perspective on the observations made by the Inquiry.  In such cases, it offers alternate evidence-based proposals for consideration. 

The Group’s Final Submission focuses on three key themes: contributing to a prosperous future for Australians, building on a solid foundation; and maintaining system resiliency.  The key recommendations made by the Group in the Final Submission include:

• Providing time to allow the realisation of measures to reduce fees in the superannuation system to contribute to greater retirement security and reduce pressure on the Age Pension;
• Promoting a combination of higher education standards for financial advisers and technology-neutral regulatory environments to stimulate affordable, accessible and appropriate financial information;
• Increasing the emphasis on building and enhancing forward looking and adequately resourced financial sector supervisory models;
• Improving lender access to publicly-held information about small to medium enterprises to facilitate business lending;
• Enabling the Australian Prudential Regulatory Authority (APRA) to approve Internal Ratings Based (IRB) accreditation to non-major banks for a portion of their credit portfolios such as housing loans to improve choice and competition for home-loan seekers;
• Agreeing that Australian banks will only report internationally comparable capital ratios enabling a consistent understanding of the strong capital positions of the Australian banks;
• Continuing the strong supervisory approach of APRA, including ensuring that the conservative settings around capital required by APRA remain, and can be applied at a bank-specific level through a Pillar 2 adjustment; and
• Using APRA-designed stress tests to determine the level of loss absorbing capital that Australian banks should hold.

The Commonwealth Bank looks forward to the Final Report from the Financial System Inquiry.