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The first major review of Australia’s financial system since the 1996 Wallis inquiry, already dubbed ‘Son of Wallis’, is eagerly anticipated by the financial services sector. While much of its detail remains unknown, there’s no shortage of opinion of what it should and should not cover and where its key focus should be.
Instigated by Treasurer, Joe Hockey, this ‘root and branch’ review has the potential to significantly change the future of Australia's financial system. But with terms of reference not released until December and no head yet appointed, a clear picture of the focus of this review is yet to emerge.
BlueChip was lucky enough to attend an industry lunch held in Sydney last Friday to hear a panel of financial services industry heavyweights – including BT Financial Group CEO Brad Cooper, FSC CEO John Brogden and Deloitte Access Economics Partner Professor Ian Harper – discuss the implications of the upcoming review for the financial services sector and share their views on key areas for investigation by the inquiry. Hosted by the Financial Services Council (FSC) and Deloitte, the discussion was facilitated by the Australian Financial Review's National Affairs Columnist, Jennifer Hewitt.
While there was certainly no shortage of diverse opinions about the direction the enquiry should take, there was general agreement that the complexity of our financial system makes it no easy task.
Professor Harper – who sat on the Financial System (Wallis) Inquiry committee in 1996 – said that its report from the Wallis had a shelf life of about 10 years. Since then, much has changed in the industry, especially after the GFC highlighted the need for review of the regulatory framework for risk management needs. Professor Harper was quick to add that trying to achieve stability through regulation should not come at the cost of innovation, which has been lacking in the industry.
Meanwhile, FSC CEO John Brogden, is hoping the inquiry will create an environment where the investment management sector can be an export industry for Australia, with a view to becoming a financial services centre for the region (which some consider an ambitious aim). Mr Brogden pointed out that, in his view, the only way this might become a reality is through changes to tax rules to make Australia more competitive with Asia.
Whether you think this inquiry should focus on the banking sector, superannuation or the structure of the financial services sector in general, I believe Jennifer Hewitt aptly predicted the biggest challenge: combining a big-picture focus with practical positive results.
Hopefully, we will see an open-minded inquiry with a forward looking view that will create a blueprint for the long term prosperity of our financial system and those it serves.
