Australians have much to cheer about today, although it may not seem like it, as the stock-market sinks into the red.
The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has dropped 0.4% to 5,248.10 in lunchtime trading and appears headed lower. Housing prices appear headed lower too, as we wrote yesterday.
But the good news is that the Federal government has adopted 42 of the 44 proposals coming out of the David Murray Financial System Inquiry (FSI). Far too often, the government commissions an inquiry staffed by experts in their field and then ignores most if not all of the recommendations in their final report.
This time it's different.
For most Australians, the benefits will likely be small – but noticeable.
- Excessive credit card (and debit card) surcharges will be banned. That means great news for travellers, but not so good news for Cabcharge Australia Limited (ASX: CAB), Virgin Australia Holdings Ltd (ASX: VAH) and Qantas Airways Limited (ASX: QAN) and their respective subsidiaries Tiger Airways and Jetstar.
- Superannuation fees will be cut. The government is committed to ensuring the superannuation system is more competitive and efficient. Super funds may have to tender to win the right to manage the default superannuation savings of many Australians, which should lower fees.
- All employees will be able to choose their own fund. Whilst most of us already have this ability, many workers still do not.
- The risk of one or more of our banks falling over will be reduced – with the government committed to ensuring we have a strong banking system. It means the big four banks, Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) in particular, will most likely be forced to raise even more capital.
- Stricter controls and higher standards for our financial planners, meaning our financial advice should be much better than it is today and mostly eliminate the dodgy practices that we've seen in the past.
- Investors could have the ability to invest in simple corporate bonds after the government agreed to simplify disclosure documents for large corporates.
- Making it easier for consumers to understand general insurance, particularly home insurance.
The one proposal the government didn't agree on was to ban borrowing to invest in property by self-managed super funds (SMSFs), citing insufficient evidence. Instead, the government proposes to monitor risk and leverage and use that data to see whether changes need to be made.
Foolish takeaway
Most of the proposals appeared sensible anyway and will make our financial system stronger. Ther's plenty of other improvements the government can make, but finally, it at least appears to be doing something right – after what seems like years in the wilderness.
