Australia’s population is approximately 24 million,6 with a median age of 37.4 years.7The average net worth for all Australian households in 2013–14 was
$809,900.8 In real terms, average equivalised disposable household income was AUD 998 per week in 2013–14.9Over 70% of households had debt of some level in 2013–14.10 Twenty-six per cent of such households were servicing a total debt that was three or more times their annualised disposable income.11Of 8.8 million households in 2014,12almost 36% had a mortgage over their primary residence.13
A. D. Schmulow (&)
University of Western Australia, Crawley, Australia e-mail: Andy.Schmulow@uwa.edu.au
J. O’Hara
Minter Ellison Law Office, Sydney, Australia
©Springer Nature Singapore Pte Ltd. 2018
T.-J. Chen (ed.),An International Comparison of Financial Consumer Protection, https://doi.org/10.1007/978-981-10-8441-6_2
13
Trading Economics,“1959–2016”, inAustralia Household Saving Ratio, published by Trading Economics, 2016, accessed: 8 December, 2016
Trading Economics, “1976–2016 “, in Australia Consumer Credit, published by Trading Economics, 2016, accessed: 8 December, 2016
Trading Economics,“1977–2016”, inAustralia Households Debt To Gdp, published by Trading Economics, 2016, accessed: 8 December, 2016
As at October 2016 the total value of bank deposits held by Australian house- holds was AUD 815,708 million.14Almost 14 million working-age Australians had some form of life insurance as at late 2013,15and 24% had some form of credit card debt.16 Superannuation assets totalled AUD 2.1 trillion as at the end of the June 2016 quarter,17and over 14.8 million Australians had a super fund account.18
Total employment in the Financial and Insurance Services sector numbered 444,400 in February 2016.19 Australia’s largest bank, Commonwealth Bank, had total assets in 2016 of AUD 933,078 million, and total liabilities of AUD 872,322 million. Its net asset position was AUD 60,756 million.20 The bank’s Common Equity Tier 1 Basel III capital buffer was 14.4% on an international comparable basis, and 10.6% using the APRA definition.21
According to the IMF, across the entire Australian banking sector, regulatory tier 1 capital to risk-weighted assets averages out at 12%, which places Australian banks 69th in the world.22In terms of tier 1 and 2 capital to risk-weighted assets, the same report places Australia 70th in the world.23
There are a total of 94 insurers authorised to write new or reinsurance in Australia,24of which 29 are life insurers,25and 18 are not-for-profit/mutual health insurers.26
In terms offinancial literacy, Australia ranksfirst in the Asia-Pacific region, and ninth in the world.27
Australians enjoy access to a comprehensive social welfare system, the primary purpose of which is to provide individuals with a‘minimum adequate standard of living’.28The principle forms of social welfare include income support payments and payments to families, including age and other pensions, the ‘Newstart Allowance’, and the Family Tax Benefit and supplementary payments schemes.29 Income support payments are made to those identified as unable to support themselves, with their need for support measured by means-testing of income and assets.30According to the most recentfigures available, as at 2013, approximately 5.1 million Australians received some form of social security.31During 2015/2016 the Australian government spent AUD 154 billion on social security.32
According to the Financial Ombudsman Service, of those seeking assistance in relation to financial consumer protection, 50% were male, 32% female and 18%
joint applicants.33 Forty-seven percent were between the ages of 40 and 59, and 22% were between the ages of 30 and 39.34
Research conducted under the National Financial Literacy Strategy found that only 25% of Australians reported having a long-termfinancial plan in place (15– 20 years).35 Eighty-eight per cent of those surveyed had at least one insurance policy,36 and 78% indicated that they have a retirement policy (superannuation fund).37 Around 10% of Australians surveyed maintain a self-managed superan- nuation fund.38Of those surveyed, 40% did not understand the risk/return trade-off principle,39and 34% were unaware of the diversification principle.40
2 Financial Consumer Protection System (Software)
The framework for the protection offinancial consumers can be categorised into two main areas. First, there are general protections afforded to consumers of financial products41 and financial services,42 and secondly, there are industry specific regimes covering matters such as licensing, conduct and disclosure.43
The first category, consumer regulation, is contained across an array of Statutes.44From the perspective of genericfinancial consumer legislative protection
—that is to say protections that are not contained in legislation that covers specific products, like insurance—the most important provisions are contained in the Australian Securities and Investments Commission Act 2001 (ASIC Act).45This Act covers allfinancial products and services, including credit. The provisions of the ASIC Act mirror the relevant provisions of the Australian Consumer Law,46 and empower ASIC to administer these provisions.
The second category, industry-specific consumer regulation, includes licensing, conduct and disclosure regimes, as contained in theCorporations Act 2001,47and theNational Consumer Credit Protection Act 200948—the most notable of which address responsible lending, hardship and unjust transactions.
It is not within the scope of this chapter to address every aspect of these pro- tections. Analysis will be confined to the most salient elements overall of consumer protection.