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2014 Financial System Inquiry

The 2014 Financial System Inquiry was annouced by the Treasurer, the Hon. Joe Hockey MP, on 20 November 2014. The Inquiry's Final Report was released on 7 December 2014 and the Inquiry has concluded. For more information please visit the 2014 Financial System Inquiry website.

FINANCIAL SYSTEM INQUIRY - TERMS OF REFERENCE AND MEMBERSHIP

The Government has decided to establish an Inquiry into the financial system to report to the Treasurer by 31 March next year.

Consistent with the undertakings I gave on behalf of the Coalition before the Federal election, the Inquiry will undertake a stocktake of financial regulation, seek to establish a common regulatory framework for overlapping financial products, and propose ways and means for dealing constructively with further financial innovation.

The terms of reference of the Inquiry announced in this statement were developed after considering the many thoughtful suggestions which have been made to me over recent weeks by many organisations and individuals.

I am directing the Inquiry to provide a stocktake of the results arising from the financial deregulation of the Australian financial system since the early 1980s. The forces driving further change will be analysed, in particular, technological development. The Inquiry will make recommendations on the nature of the regulatory arrangements that will best ensure an efficient, responsive, competitive and flexible financial system to underpin stronger economic performance, consistent with financial stability, prudence, integrity and fairness.

The Inquiry is to be chaired by the distinguished Australian businessman, Mr Stan Wallis, who is shortly to retire as Managing Director of Amcor Limited. The other members of the Inquiry will be Mrs Linda Nicholls, Mr Bill Beerworth, Professor Jeffrey Carmichael and Professor Ian Harper. These members bring to the Inquiry a wealth of expertise and experience in business, the financial sector and regulatory issues. Further background information on the members is attached.

I expect the Inquiry to complement but not duplicate concurrent developments in Government policy affecting the financial sector and regulatory practices. For example, a major policy review on taxation of financial arrangements has been under way for several years and is well advanced. So is the project on simplification of corporations law. Other processes are in place to examine the taxation of leasing arrangements and the taxation of life offices and friendly societies, respectively. I have therefore indicated several matters on which the Inquiry is expected to take account but not make recommendations. Implementation of the Government's superannuation policy initiatives, including the introduction of Retirement Saving Accounts, will continue to progress.

The Inquiry will be supported by a full time secretariat. The Secretary will be Mr Greg Smith who has been seconded from the Treasury. The secretariat will be responsible exclusively to the Inquiry and will include staff from the private sector and staff seconded from other agencies. It is expected that the majority of meetings of the Inquiry will be held in Sydney and Melbourne.

It is anticipated that the first meeting of the Inquiry will occur in mid-June, after which a formal and open invitation for public submissions will be issued. I have directed that submissions be available for public release except, of course, where any commercial information must be kept confidential at the discretion of the Committee. I have also directed that the Committee avoid adversarial proceedings. The Committee will determine its own procedures to ensure all views are properly heard and considered.

The Government has decided to undertake this Inquiry in a relatively short time frame to ensure that its recommendations can be considered expeditiously and allow Government to respond and act on the recommendations in this parliamentary term. This will minimise uncertainties in the financial system about the future regulatory framework and ensure quick responses to the rapid pace of change now occurring in financial markets.

30 May 1996
CANBERRA

Contacts: Anthony Smith (06) 277 7340


FINANCIAL SYSTEM INQUIRY - MEMBERS

Mr Stan Wallis, the Inquiry Chairman, is known nationally and internationally for his outstanding achievement as managing director of Amcor Ltd (formerly APM Ltd), a position he has held since 1977 and from which he is about to retire. He has agreed to take leave of absence from the AMP Society's Principal Board in order to undertake this assignment but retains a number of directorships in other leading Australian companies. He is a graduate of the University of Melbourne and Stanford University, and lives in Melbourne.

Mr Bill Beerworth is a solicitor and merchant banker and is the Principal Partner of Beerworth & Partners Ltd, a corporate and financial advisory firm. He is chairman of Straits Resources Ltd. He was formerly a senior partner at Malleson, Stephen Jaques, and has been a director of HongKong Bank of Australia and managing director of Wardley James Capel Corporate Finance Ltd, its merchant banking arm. He is a graduate of the Universities of Sydney, Virginia and New South Wales, and lives in Sydney.

Prof Jeffrey Carmichael is Professor of Finance and Director of the Centre for Banking and Finance at Bond University. He helped to form the Australian Financial Institutions Commission in 1991-92 and has been its Chairman since 1992, and Chairman of the Queensland Office of Financial Supervision since July 1995. He has agreed to step down from these positions in order to undertake this assignment. He is a member of the board of the Queensland Treasury Corporation. His earlier career at the Reserve Bank of Australia included holding several senior positions. He is a graduate of the University of New South Wales and Princeton University, and lives in the Gold Coast.

Professor Ian Harper is Ian Potter Professor of International Finance at the Melbourne Business School within the University of Melbourne. His academic career has included lecturing in economics at the Australian National University, a Fulbright post-doctoral fellowship and another professorship at the University of Melbourne. He has worked in the Research Department of the Reserve Bank, and is a member of the Victorian Treasury Business Advisory Group. He is a graduate of the University of Queensland and the Australian National University, and lives in Melbourne.

Mrs Linda Nicholls has been executive director of County NatWest Australia Investment Management from 1991 until her recent move to full-time company directorships and financial consulting. She is a director of the Australian Postal Corporation, the Transport Accident Commission of Victoria, Perpetual Trustees, and the Victorian Docklands Authority, and has been a member of the Advisory Board of BP Australia and a commissioner of SEC Victoria. Her earlier career included senior positions in the Bank of New Zealand and Australian Bank in Sydney and Melbourne, in Brown Brothers Harriman in New York and in Broadbank Corporation in Auckland. She is a graduate of Cornell and Harvard Universities, and lives in Melbourne.


FINANCIAL SYSTEM INQUIRY - TERMS OF REFERENCE

Mission

The Inquiry is charged with providing a stocktake of the results arising from the financial deregulation of the Australian financial system since the early 1980s. The forces driving further change will be analysed, in particular, technological development. Recommendations will be made on the nature of the regulatory arrangements that will best ensure an efficient, responsive, competitive and flexible financial system to underpin stronger economic performance, consistent with financial stability, prudence, integrity and fairness.

Specifics

1. The Inquiry will report on the results arising from the financial deregulation flowing from the Inquiry into the Australian Financial System ("Campbell Report") published in 1981. This will involve examining and reporting the consequences for:

(a) the choice, quality and cost of financial services available to consumers and other users;

(b) the efficiency of the financial system including its international and domestic competitiveness;

(c) the economic effects of deregulation on growth, employment and savings;

(d) the evolution of financial institutions and products offered by them and the impact on the regulatory structure of the industry.

2. The Inquiry will identify the factors likely to drive further change including:

(a) technological and marketing advances;

(b) international competition and integration of financial markets;

(c) domestic competition in all its forms;

(d) consumer needs and demand.

3. The Inquiry will make recommendations on the regulatory arrangements and other matters affecting the operation of the financial system (including prudential and other regulations made by the Reserve Bank and other bodies) as will:

(a) best promote the most efficient and cost effective service for users, consistent with financial market stability, prudence, integrity and fairness;

(b) ensure that financial system providers are well placed to develop technology, services and markets and that the financial system regulatory regime is adaptable to such innovation;

(c) provide the best means for funding the direct costs of regulation;

(d) establish a consistent regulatory framework for similar financial functions, products or services which are offered by differing types of institutions.

4. The Inquiry in its consideration of financial system regulation may not make recommendations on, but will take account of:

(a) the objectives or procedures of the Reserve Bank in its conduct of monetary policy;

(b) retirement incomes policies;

(c) the regulation of the general operation of companies through corporations law;

(d) policies for the taxation of financial arrangements, products or institutions.

5. In carrying out its investigations, the Inquiry may invite submissions and seek information from any persons or bodies.

6. A final report is to be provided to the Treasurer no later than 31 March 1997.

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