Today I am releasing the Review of the Outcomes of the Financial System Inquiry 1997 by the Financial Sector Advisory Council (FSAC).
The Government established FSAC as part of the financial sector reforms responding to the 1997 Financial System Inquiry. The Council is a non-statutory body that brings together a broad range of views from the financial sector. It reports directly to me on policies that will maintain an efficient, competitive and dynamic financial sector, consistent with the objectives of fairness, financial stability and prudence, and promotes dialogue between the private sector and the Government in support of the development and growth of Australia’s financial sector.
In its Charter, I specifically tasked FSAC with conducting a detailed evaluation of the financial sector reforms flowing from the Financial System Inquiry (which were announced on 2September1997) five years after their commencement. FSAC has now completed the review as it is just over five years since those reforms began, including the establishment of the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission.
The Council’s usual role is to provide confidential advice to me and the Government on appropriate policies for the financial sector. However, given the very specific nature of FSAC’s commitment to review the Financial System Inquiry Reforms I have decided to release it publicly. The expertise of the FSAC members and the thoroughness of the Review means that it will provide some well considered perspectives on financial sector regulation.
I would like to pass my thanks to the Council members, including past members, on completing this task. The Review plays an important role in the reform process and serves as a key indicator for assessing whether the key objectives of the reforms have been met.
Overall, FSAC is confident that Australia’s financial system and its regulation are on a firm footing and compare favourably with the rest of the world. As such, the Council notes that the Australian economy, and its financial system, has proven resilient in the face of considerable world economic and political turmoil.
FSAC sees globalisation, convergence and technological change to be three important forces that will continue to drive the evolution of the financial system and identifies the importance for policy development and regulatory structures to keep pace with these forces. FSAC finds that the Australian regulatory system is fundamentally well placed to meet these challenges.
The Review also identifies certain areas where the Council considers that regulatory challenges remain and I will take into account its views when considering future options.
The Review can be found on the Financial Services page of the Treasury website at www.treasury.gov.au