The Department of Treasury's submission to the Financial Service Inquiry has flagged the importance of financial advisers in assisting consumers to engage with the financial system and to cut through the complex nature of many products.
Treasury stated the "nature of financial products and decision making is affected by complexity and challenges in obtaining and analysing information" and the mandated disclosure regime "did not provide sufficiently meaningful and digestible information to consumers constrained by time or ability".
"This underscores the important role for financial advisers to provide professional, high-quality and affordable information to assist consumers in engaging with the financial system."
The submission stated the Financial System Inquiry should consider redesigning disclosure requirements "for the digital age to enable the growth of ‘information intermediaries' that can apply expertise in presenting information in an effective and digestible way".
Treasury also stated that a key area where more work was required was the development of financial products that could be used by retirees during the draw-down phase and to manage longevity risk.
It stated in the submission that while superannuation was a key part of Australia's retirement income policy, much of the focus was on the accumulation phase, with superannuation and insurance product providers having yet to develop products necessary to managed longevity risk during the drawdown phase.
Treasury said that both the Henry Review and the Cooper Review had raised these issues and this inquiry should offer a way forward to the development of these vehicles.
It stated that annuities that delivered a defined level of income for life would be very expensive and would shift high levels of risk from individuals to product providers. It suggested the FSI look at alternative products that provide a balance between risk transfer and affordability while also considering why they have yet to be developed.
Treasury stated that while the Australian financial system was strong and well regulated, further regulatory directions would have to follow global trends and influences to allow Australia to interact with other global financial systems.