YELLOW BRICK ROAD : S FINANCIAL SYSTEM INQUIRY SUBMISSION PUTS AUSTRALIANS FIRST

31 MARCH 2014
Yellow Brick Road Wealth Management (ASX Code: YBR) ("Yellow Brick Road") today released its
submission to the Australian Government's Financial System Inquiry.
The submission, which will be sent to the inquiry panel today, calls for changes to the system in order to support the two Australian dreams - to own a home and to retire comfortably. To ensure that Yellow Brick Road's submission accurately reflected the needs of Australians, the company opened up its five point plan to the public, giving consumers a two month period to make contributions and comments via its website.
"We see this inquiry as an opportunity to build a stronger financial system and ensure that Australians aren't left behind," said Yellow Brick Road CEO, Matt Lawler. "Right now, there are young people who can't get into the housing market, let alone think about saving for retirement; small business owners who can't accumulate superannuation or access affordable financial advice; and older Australians retiring with almost no savings because of ongoing mortgage debt. There are changes that need to happen today so we can set young people up for a better financial future and this inquiry is a one-in-a-generation opportunity to deliver that outcome."
Yellow Brick Road's Five Point Plan for a Fairer Financial System focuses on:
1. More help for Australians to master their personal finances
2. More transparency in interest rate advertising
3. Real competition for real consumer choice
4. Supporting the life dream of a house and a comfortable retirement
5. A fairer system for the 'outsiders' - particularly women, small businesses, and young people.
Yellow Brick Road believes that the responsibility to address these issues lies not only with the government, but also with the financial services industry, and with consumers themselves. The company believes that an informed and educated population is crucial to the operation of a good financial system.
"The Australian Government certainly has an important role to play in ensuring that policy settings around competition, education and regulation assist Australians rather than hinder them," Lawler said. "But Government can't do everything. It's also up to financial services organisations to play a role in shaping a better system and giving people the tools they need to take better control of their financial lives.
"A key recommendation of our submission is to broaden the opportunity for Australians to access better financial education, including an update to the national education curriculum. From our Five Point Plan, one of the strongest areas of feedback was on educating children and giving them an opportunity to avoid the mistakes that are so easily made. This needs to be a major focus for all
parties involved so we can give our future generations a better opportunity to set themselves up for
success."
Further public feedback received on Yellow Brick Road's draft submission can be found on the website at www.ybr.com.au/fairerfinancialsystem

For more information, contact: Chelsea O'Donnell
Head of Marketing & Communications Yellow Brick Road Wealth Management T 02 8226 8202
M 0414 704 033
E Chelsea.ODonnell@ybr.com.au

Yellow Brick Road is a wealth management and financial services organisation that offers tailored advice and services to Australians wanting to build financial security for the future. With its extensive neighbourhood based branch network, Yellow Brick Road is committed to delivering accessibility, quality financial advice and competition in the market. For more information visit www.ybr.com.au

An informed and educated population is crucial to the operation of a good financial system. If we expect Australians to build sufficient wealth to retire comfortably in their own home, then we have to ensure that people know how to make enough good decisions to get them there. The Australian Government should work with the States and Territories to amend the national education curriculum to include financial literacy skills. This will help our youth understand the fundamentals of financial management from budgeting to savings and borrowing to superannuation.

Financial services legislation needs to be simplified, internally consistent and address the needs of consumers, rather than regulators or financial service providers. Advice to clients currently crosses regulatory channels, which adds expense for the client and adds excessive paperwork, making it difficult and confusing for the consumer to absorb. Regulation should be simplified to make it more consumer- friendly; in particular, processes and requirements for advice delivery across the basic needs of savings, superannuation, risk and mortgages should be simplified for those under 45 and below certain income thresholds. Overly complex regulation adds to cost of delivering advice, reducing access for Australians.

In the event of refinancing, the Australian Government should require through legislation the timely discharge of a mortgage by a lender within 14 days in order to allow Australians to exercise their consumer choice rights efficiently.

The Australian Government should amend taxation laws to allow financial advice from a registered financial adviser to be tax-deductible for people earning up to $75,000 up to a value of $1500 per annum. This will empower all Australians to be able to manage their finances and protect them and the government from negative consequences of financial decisions.

Mandate true rate advertising for financial products by amending comparison rate legislation to reflect a true average mortgage of $300,000 and amend the Trade Practices Act 1974 to require the standardised, annualised interest rate to be prominently displayed and communicated pre- contractually, to avoid confusion over compounding and other gradated rises. Discount advertising should be banned because of its high potential for confusing customers into buying poor products.

Introduce a bank levy to price the taxpayer guarantee of deposits of up to $250,000 to provide
Australians with a return on their investment and compensate for the risk shifted to the taxpayer.

The Australian Government should invest the proceeds of the banking levy into a fund that invests in securitisation of home loans through the Australian Office of Financial Management, thereby providing smaller and non-bank lenders with the ability to compete with the four major banks, which currently benefit unfairly from a Government guarantee on deposits but also dominate the market for deposits (and therefore access to funding).

The Australian Government should amend the Australian Securities and Investments Commission Act 2001, to change ASIC's mandate to include promoting competition in the financial services system.

The Australian Government should incentivise saving across a person's lifecycle, recognising that younger people are focused on securing a home before they can turn their mind to saving for retirement. But the two goals are not mutually exclusive - owning a home is an indicator of a comfortable retirement. There are a range of options for the Government to consider, including Shared Equity Schemes for people to be able to enter the housing market earlier and start paying off a home, or a new 'Savings for Life' product where additional contributions to the mortgage sit in an account linked to the mortgage for their place of residence and those payments are treated preferentially under the tax system just as superannuation contributions are. This will help to address insecure housing, encourage a pattern of savings and address the perverse outcome where superannuation is used to pay off housing debt upon retirement - after the banks have already profited from their longer, later, larger mortgage.

To address the inequality in superannuation in the system, the Australian Government should amend contribution limit rules to average up to a cumulative five year period and allow pooling of contributions with a spouse. This will particularly assist women, small businesses and other Australians that have variable incomes.

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