John Brogden

The draft terms of reference for the financial system inquiry announced by the Prime Minister and Treasurer last night, provide a framework for the evolution of Australia’s financial services industry into a major services exporter in the 21^st Century according to the Financial Services Council.

“Australia’s financial services industry is looking to this inquiry to establish the architecture for growth into Asia,”FSC CEO John Brogden said.

The FSC welcomed the appointment of David Murray AO as chair of the review saying he is the “right person at the right time” for the role.

“David Murray has a deep knowledge of the financial services sector,” Mr Brogden said.

“He has spent his entire career in the financial services industry and has extensive experience in financial markets. We are pleased that he will be supported by a council of international experts to advise on international competitiveness and offshore regulatory frameworks.”

He also said: “The financial system inquiry will play a critical role in underpinning Australia’s future economic growth.”

“We are starting from a position of strength with a sophisticated, well-functioning financial services system which has withstood the biggest stress test on our economy since 1929.”

“The financial system inquiry is timely as we are at the beginning of the next phase in the evolution of Australia’s financial services industry. “

“As one of Australia’s major growth industries, financial services must be able to deliver more for all Australians and be more globally competitive.”

Mr Brogden said he expected one area of emphasis in the inquiry would be the need for greater competition and trade in financial services.  In particular, the export of financial services to Asia and what the industry can do to link with the economies of Asia.

“Australia already has some runs on the board. The Asia Region Funds Passport is under development and the Investment Manager Regime and Significant Investor Visa regimes have been established.”

Mr Brogden said he was pleased that superannuation was a central part of the inquiry.

“The key difference between now and when the Wallis inquiry was conducted 16 years ago is that superannuation is now a $1.6 trillion industry – bigger than mining and the ASX. By 2035, superannuation will be around $7 trillion.”

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John Brogden

The Son of Wallis inquiry will be a once in a generation opportunity to reposition Australia’s financial services industry for future growth and to set in train the right structure and policies to keep our economy strong.

Speaking today at the FSC Deloitte panel discussion on Son of Wallis, John Brogden, CEO of the FSC said the overarching themes of the inquiry should be to:

1. Determine how competitive Australia’s financial system is on a comparative basis

2. Position our financial system to capitalise on this Asian century as a key services industry for Australia

3. Assess how we fund Australia’s future economic needs, and

4. Ensure we have a competitive, efficient and dynamic domestic financial system.

“Australia’s strong financial services industry saw us through the global financial crisis with investment from superannuation funds sustaining the equities and investment markets,” Mr Brogden said.

“The GFC also verified that significant financial events have international ramifications. It is therefore critical that the terms of reference in the financial system inquiry address the continued volatility of international markets to ensure Australia’s economic position remains strong.“

The terms of reference for the financial system inquiry are expected to be announced within the next few weeks.

Mr Brogden said he expected one area of emphasis in the inquiry would be the need for greater competition and trade in financial services.

”Over the past 20 years our financial services industry has established a comparative advantage in funds management with world leading professionals. But our share of the global market is small.”

“The inquiry should build on the recommendations of the Johnson Review of Australia as a regional financial services centre which provide a template for light-touch government reform to increase exports.”

“The statement of intent for the Asia Region Funds Passport signed at the APEC finance ministers meeting on 22 September is a positive step in in getting access to foreign markets.”

Mr Brogden also said one of the dilemmas of the Son of Wallis inquiry will be the funding requirements of the nation versus the savings requirements of the nation.

He said: “Superannuation must not be seen as a honeypot to fix everyone’s problems.”

“We can’t lose sight of the primary objective of superannuation which is to get the best return for investors to provide them with an adequate retirement. Where there are conflicts the primary objective of superannuation must remain in tact. That’s what people expect and that’s the deal between the government and working Australians.”

Mr Brogden also cited the need to re-define the role of the regulators.

“The mandates of ASIC and APRA need to be more firmly set as both organisations have been allowed, and in some areas encouraged during the hung Parliament, to stray out of the boundaries of administrating regulation and into the policy making arena. There needs to be a clear demarcation between policy creation by Government and administration of legislation.”

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