The government has today announced what action it will be taking following the Financial System Inquiry's (FSI's) recommendation.
The government announced this morning it does not agree with the FSI’s recommendation to prohibit limited recourse borrowing arrangements (LRBAs) by superannuation funds.
“While the Government notes that there are anecdotal concerns about limited recourse borrowing arrangements, at this time the Government does not consider the data sufficient to justify significant policy intervention,” the response from Canberra stated.
The government announced it will, however, commission the Council of Financial Regulators and the ATO to monitor leverage and risk in the superannuation system and report back to government after three years.
“This timing allows recent improvements in ATO data collection to wash through the system. The agencies’ analysis will be used to inform any consideration of whether changes to the borrowing regulations might be appropriate,” the government said.
It was also announced that the government agrees with the FSI’s recommendation to enshrine the objective of the superannuation system in legislation.
“The Government will develop legislation to enshrine the objective within the superannuation law, where it will serve as a guide to policy-makers, regulators, industry and the community about superannuation’s fundamental purpose,” the response stated.
“The objective will be a valuable yardstick against which to measure competing superannuation proposals, providing certainty that measures that do not accord with the objective will be held up to scrutiny. And it will provide a framework for important discussions Australia needs to have about fairness, adequacy and dignity in the superannuation system.”
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