Financial Services Council (FSC) chief executive John Brogden pointed to a recent trip to China by former Prime Minister Julia Gillard during which she was “surrounded by the CEOs of the four big banks”.
“It’s one thing to kick the industry at home, but we need our industry promoted here at home and overseas,” said Mr Brogden.
The UK government, by comparison, is “aggressively promoting” the UK financial services industry at home, he added.
Mr Brogden was speaking at the launch of the 2013 FSC/DST CEO Survey Report, which gauged the opinions of 55 of the 78 chief executives of the member companies of the FSC.
One of the major conclusions of the survey was that there is a need to expand the export of Australian financial services to Asia, with 81 per cent of CEOs agreeing that closer links needed to be established with operators in Asia.
The export of financial services to Asia is a lot different from “putting coal and cattle on ships”, Mr Brogden said.
Citing as an example an Australia-domiciled fund managing Asian money and investing it in Asian equities, Mr Brogden noted “that’s a complex concept compared to the rest of the trade [Australia] does.”
The biggest selling point for Australia becoming a financial services centre in Asia is the high level of regulation here, which means investors can be confident they are well protected when using Australian firms, he said.
Hong Kong is the only real competitor to Australia in the region due to its relatively stringent regulatory settings, he added.
The only reason countries like Luxembourg and Ireland are financial services centres in Europe is because they have the “right” regulatory settings, Mr Brogden said.
Most Undertakings for Collective Investment in Transferable Securities Directives (UCITs) are based in those two countries because they have no withholding tax liability for foreign investors, he added.
“There’s no natural reason Luxembourg is a funds management centre of the world – except that they’ve got the right regulatory regime,” Mr Brogden said. “Ninety per cent of all foreign financial products bought and sold in Asia come from Europe.
“At some stage I imagine the Europeans are going to realise [Australia’s move to become a financial services centre] is a threat to their hegemony in Asia,” Mr Brogden said. The Asia Region Funds Passport could potentially compete with European UCITs, according to the CEOs surveyed.
Tax arrangements for Asian investors into Australia also need to be simplified in order for Australia to become a regional financial services centre, they said.
