Australia’s Financial Services Council (FSC) has urged domestic policymakers to internationalise the nation's $2.3 trillion domestic fund industry to rival Hong Kong and Singapore.

This call by the council – which represents domestic asset managers, superannuation funds, life insurers, advisory networks and trustee firms – comes just two days after Singapore, Malaysia and Thailand jointly released the framework for the Asean fund passport.

The FSC wants the Australian Securities and Investments Commission (Asic), its financial services regulator, to appoint a new commissioner to deal with international regulatory issues.

It has also asked for a financial services agency to be set up to promote financial services abroad, which would be similar to TheCityUK and Hong Kong's Financial Services Development Council.

“Successful integration with Asia and opening up trade in financial services is pivotal to Australia’s future,” said John Brogden, chief executive of the council.

The FSC argues that Australia has not capitalised on its funds management industry because of uncompetitive regulation and taxation policies.

It said 3.4% of funds in Australia are sourced offshore, compared to 80% in Hong Kong and 60% in Singapore. The council cited data from Deloitte showing that financial services exports reached $1.6 billion in 2012, or 0.11% of GDP, compared with 5.75% of GDP in Hong Kong and 5.58% in Singapore.

Moreover, it noted that financial services provisions under free-trade agreements that Australia has signed with Asian countries, including Japan and Korea, have not been implemented. A new coordinating body would help government agencies adopt such policies, the FSC argued.

In 2008, Australia and Hong Kong signed a deal for the mutual recognition of retail funds. However, the FSC noted that there had been no take-up since the scheme began in 2009. "This is an indictment on both jurisdictions for drafting a mutual recognition arrangement which neither jurisdiction has been able to put to use,” it stated.

The new body should cover issues relating to international recognition, such as mutual recognition arrangements, financial service sections of FTAs, double taxation treaties and the coordination of government agencies, the FSA said. It suggested funding could come from the government and a levy on the fund industry.

The body would be tasked with coordinating policy between government agencies, promoting Australia as a financial centre in Asia, reviewing regulation, liaising with industry bodies abroad and developing a financial services strategy.

Further recommendations include twice-yearly delegations to Asian countries led by senior cabinet ministers, and an annual forum to be held in Australia attended by finance industry executives, regulators and academics from across Asia Pacific.

Earlier this month, the council called on the government to deliver key legislative and regulatory changes to make the pending ARFP passport scheme viable – including on taxation, commissions and allocation to Ucits funds.

The governments of Australia, Korea, New Zealand and Singapore agreed to establish a pilot for ARFP at the Apec finance ministers meeting in September 2013. Subsequently the Philippines and Thailand joined the consultation.