Watch the highlights of this event.
David Murray presented the conclusions of the Report-Financial System Inquiry Report at the 27th Australasian Finance & Banking Conference. Mr Murray first addressed key reasons for the regulation of the financial system, explained the emphasis on competition, efficiency and innovation, and delved into the Report's findings on the topic of culture of financial institutions. The Report indicated that information imbalances and asymmetries - a challenging issue affecting consumers within the financial system - remained an area of concern, despite recent Future of Financial Advice (FOFA) reforms. Particular emphasis was placed on the obligation that product manufacturers and distributors have to focus on potential users, and the importance of ensuring that the market conduct regulator is adequately resourced, and subsequently, able to wield considerable influence over financial institutions, in order to foster an awareness of customers and end users. More specifically, the Report also included recommendations to ensure the strength of Australian bank capital ratios, to reduce the impact of self-amplifying shocks originating offshore. The Report recognised the potential for 'remarkable achievements in innovation' in the technology and payments sector. Acknowledging the unpredictability of future technological innovation, the Report also recommended the adoption of a graduated regulatory framework to enable new products to enter the market and to be regulated differently as they become systemically more significant. Mr Murray drew attention to the Report's findings on culture, concluding that the culture of financial institutions cannot be legislated or more broadly dealt with by regulators. Rather, culture is considered a competitive issue that is ultimately in the hands of the leadership to improve.