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Property investors engaging with Australia’s biggest credit and financial services providers should proceed with caution, after a new report found that misconduct cost Australian households a total of $201 billion in the last five years.
FinFuture, a report by the University of Melbourne which addresses the future of personal finance in Australia, identified high fees and misconduct as crucial issues impacting consumers who are customers of major Australian financial services institutions.
The paper prompted calls for stricter and more sensible regulations in the name of consumer protection.
“We need to reduce the complexity of regulation and be clearer about the standards we expect from people working in the finance community by tying regulation more closely to outcomes,” said Andrew Godwin, co-author of the report and director of banking and finance law at Melbourne Law School.
“Financial service providers should be subject to a duty to consider financial wellbeing in performing their functions and services.”
Other recommended changes for the finance sector included the establishment of national research centres to support industry service and technological innovation, stronger data protection and free financial health checks and advice throughout different points in consumers’ lives.
The trust deficit
Co-author Carsten Murawski from the university’s faculty for business and economics said many Australians had lost trust in financial institutions, which was holding them back from improving their financial situation.
“About two-thirds of Australians face some level of financial vulnerability and stress,” Professor Murawski said.
“Financial concerns are now the number one concern among young people.”
The research found that following “I do not trust financial institutions or advisers”, the second most cited reason stopping Australians from improving their financial situation was “Thinking about my finances is overwhelming”.