Ex-Commonwealth Bank boss David Murray will lead a major inquiry into Australia’s financial system.
Treasurer Joe Hockey announced yesterday the former Future Fund chairman and CBA chief executive would head the Financial System Inquiry (FSI) – the most significant inquiry into the country’s financial system in sixteen years.
Prime Minister Tony Abbott has said the inquiry hopes to “foster an efficient, competitive and flexible financial system, consistent with financial stability, prudence, integrity and fairness”.
The key focus points of the inquiry include minimising Australia’s volatility in global capital markets, balancing competition, innovation and efficiency and integrating Australia’s financial system and regulation with others internationally.
“As part of our broader deregulation agenda, the Government intends to reduce the regulatory burden on the financial services sector wherever the benefits to competition, efficiency, market stability or consumer protection are questionable,” said Abbott.
Murray was chief executive of CBA from 1992 to 2005 and has a strong and lengthy background in finance, including being awarded the Order of Australia for services to the financial sector education and the community in 2007 and the Centenary Medal for contributions to banking and corporate governance in 2003.
Australian Bankers’ Association chief executive Steven Münchenberg has called on the inquiry to encourage more competition in the banking sector by ensuring the availability of sources of funding and capital for all lenders.
“Protecting stability continues to be important, but we’ll need to balance stability with competition, innovation and our capacity to deliver affordable banking services to all Australians,” said Münchenberg.
“We must ensure that we have a banking system that continues to meet the needs of household and business customers, shareholders, employees and the broader community. Meeting the needs of customers, including families and small businesses, must be central.”
The last inquiry of this kind took place in 1997, headed by leading business figure Stan Wallis. Prior to this Sir Keith Campbell undertook the first major investigation into Australia’s financial system in 1981. The findings of both these inquiries led to major reforms.
Mr Murray will head a Committee of four eminent Australians drawn from the finance, business and academic sectors.
Draft Terms of Reference for the inquiry are being released for a two week consultation period.
Following feedback, final terms of reference and the final composition of the inquiry will be announced in mid-December, with the inquiry to publish an interim report by September 2014 and deliver a final report by November 2014.
2006-2012: Future Fund chairman
1992-2005: CBA chief executive
2007: Awarded Order of Australia for services to financial sector education and the community
2003: Awarded the Centenary Medal for his contributions to banking and corporate governance
Key areas of inquiry:
How the financial system can more efficiently allocate Australian sourced capital to minimise our exposure to volatility in global capital markets;
How we can best balance competition, innovation and efficiency, with stability and consumer protection;
The role and impact of new technologies, market innovations and changing consumer preferences; and
International integration, including international financial regulation.