The Financial Services Council (FSC) is today pleased to launch the State of the Funds Management Industry Report prepared by KPMG, which lifts the lid on the regulatory and tax policy settings that are limiting Australia's funds management industry becoming a major global financial services centre.
KPMG has found Australia's funds management industry continues to see significant growth with $4.31 trillion in funds under management (FUM) - an increase of 13 per cent from $3.81 trillion in June 2020. However, just 6.5 per cent of overall FUM in Australia is sourced from overseas, compared to 78 per cent in Singapore, 90 per cent in Ireland and 95 per cent in Luxembourg.
CEO of the FSC, Blake Briggs said: "Australia has a globally sophisticated funds management industry, with low fees by global standards, but is missing out on the opportunity to manage offshore due to regulatory and tax policy settings that fall short of international peer comparisons.
"The significant foreign capital managed in other financial centres is not an accident. This has been achieved through a deliberate focus by these jurisdictions on regulatory and tax reform that support the global attractiveness and competitiveness of their funds management sectors.
Change is required to help Australia compete globally
The report makes a number of recommendations to enhance the competitiveness and attractiveness of Australia's funds management industry.
Key recommendations include:
- Developing transition arrangements to deliver a globally competitive Corporate Collective Investment Vehicle.
- Updating and reviewing a variety of tax rules so that Australian managed vehicles are competitive with other financial centre jurisdictions.
- A mechanism for old legacy funds management products to be converted into modern products to deliver better outcomes for consumers and encourage product innovation.
- Legislating climate-related financial risk disclosures for Australia's significant businesses to allow fund managers to improve pricing of climate risks; and
- Continued examination of the Your Future Your Super performance test to avoid unintended consequences and to ensure the test approach and benchmarks are not adversely constraining investment decisions.
