Financial System Inquiry recommends reforms to support impact investing

Social Ventures Australia (SVA) welcomes the inclusion of impact investing as a ‘significant matter’ in the Financial System Inquiry (FSI) Final Report.

The report recommended the government:

  • Explore ways to facilitate development of the impact investment market and encourage innovation in funding social service delivery
  • Provide guidance to superannuation trustees on the appropriateness of impact investment
  • Support law reform to classify a private ancillary fund as a ‘sophisticated’ or ‘professional’ investor, where the founder of the fund meets those definitions (Financial System Inquiry – Final Report, p. 261)

The report also noted that clarifying some aspects of regulation would facilitate the development of the impact investing market, including clearer guidance from the Australian Prudential Regulation Authority (APRA) on the appropriateness of impact investment for superannuation trustees. Among other recommendation the report suggested that the Government’s role should include ‘offering explicit public endorsement for the significant private sector interest in this emerging market.’ (Financial System Inquiry – Final Report, p. 262)

Ian Learmonth, Executive Director of Impact Investing at SVA commented:

“It’s great to see impact investing included in the final report of the FSI and we hope it will now encourage the Federal Government to directly support impact investing by bolstering intermediaries and promoting innovative financial models like social impact bonds.”

“A larger and more robust impact investing market will realise savings and benefits to the community and governments at every level. It will result in increased capital flow to the community sector, enable government to fund preventative social services with greater efficacy, and improve innovation, data collection and reporting.”

“We look forward to working with the Government, and with interested parties across sectors to ensure a thriving impact investing market becomes a reality in Australia, and this report is another encouraging step to that end.”