The Australian Government launched its Financial System Inquiry (Inquiry) in December 2013. The Inquiry is evaluating the current performance of Australia’s financial system and developments since the 1997 Financial System Inquiry (Wallis Inquiry), with a view to meeting evolving needs and supporting economic growth.
What’s happened so far
Initial submissions to the FSI closed on 31 March 2014. Insurance-related issues raised in these submissions include:
- the regulatory response to the GFC and the collapse of HIH, and the need to balance the competing objectives of stability and efficiency;
- the appropriate allocation of risk within the community, and the effect of the GFC on public expectations of when and where governments will intervene;
- differences in the prudential treatment of various insurable risk products;
- the impact of taxes and duties on insurance affordability and efficiency;
- areas of regulatory duplication and overlap; and
- the impact of demographic changes, in particular challenges created by the ageing population.
The Inquiry will release an interim report in mid-2014, which will be followed by a second call for submissions. In an address to the Australian Business Economists on 1 May 2014 the Inquiry’s Chairman, David Murray, noted that the interim report will ask:
- how far the government should go to try to prevent losses to consumers;
- whether “current system settings” prevent the Australian economy from operating and allocating funds efficiently; and
- whether regulation is “appropriately calibrated to provide confidence in our financial system while allowing technological change, innovation and entrepreneurship.”