Joe Hockey says the final report from the independent financial system inquiry lays out a blueprint for the next decade.

The treasurer released the report that was put together by David Murray, the former boss of the Commonwealth Bank of Australia and inaugural head of the Future Fund, and his team after a year-long review.

“The financial system is vitally important to boosting productivity and growth in the Australian economy,” Mr Hockey said at the release of the report in Sydney.

The final report of Mr Murray’s blueprint for the future of Australia’s financial system, released by Treasurer Joe Hockey on Sunday, says capital requirements should be raised to make Australian banks less likely to fail, but also to minimise the costs to the taxpayer if they do. The recommendation is opposed by the major banks.

The report made two key proposals that may raise costs for the major banks by billions – potentially hitting profit margins and dividends – but also assist smaller banks to compete.

• Read the full report here
• Read the full list of recommendations here 
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It would also level the playing field for smaller banks and lenders, reducing the perception that the government would step in to rescue the big banks if they were in trouble.

The big banks have already complained that holding extra capital would be damaging, and ANZ says it will result in higher interest rates for customers.

A key finding of the report is that Australia’s major banks sit only middle of the road in the amount of capital they hold to cover potential loan losses.

In reaching this finding, the inquiry has expressly rejected research commissioned by the Australian Bankers’ Association that put Australia’s banks in the top quarter of institutions globally.

Superannuation recommendations

The inquiry also recommends clamping down on borrowing by superannuation funds and the introduction of a competitive process to allocate new workforce entrants to MySuper products.

Provisions that deny some workers the ability to choose their own super fund should also be removed.

The report says the superannuation system should be improved by policies that remove barriers to innovation, increase competition and cut the amount of a workers’ super that is paid in fees.

The inquiry also recommends a clean-up of credit card surcharge regulations, which would allow consumers using debit cards to avoid paying exorbitant surcharges when paying for airline tickets and other items.

Mr Murray, a former Commonwealth Bank boss and Future Fund chairman, was last year charged with undertaking the biggest health check of Australia’s financial system since the 1997 Wallis inquiry, which led to the establishment of the Australian Prudential Regulation Authority.

The inquiry received more than 6500 submissions since their producing an interim report in July.

The government says it will now consult with stakeholders before it makes any decision on the recommendations, with a formal response to be released in mid-2015.

WHAT THE FINANCIAL SYSTEM INQUIRY SAYS NEEDS TO CHANGE:

* Murray inquiry into financial system makes 44 recommendations.

* Banks should retain more money in case of financial crisis.

* All employees should have the ability to choose the fund into which their superannuation guarantee contributions are paid.

* It seeks a review of MySuper products in 2020 to insure they have been effective in significantly improving competition and efficiency.

* Improved surcharging on card transactions.

* The competency of financial advice providers should be raised.

* Create a new financial regulator as a watchdog over other financial regulators.

* Government will respond after March next year after further consultations.

—with ABC, AAP