NO.062

FINANCIAL SECTOR ADVISORY COUNCIL REVIEW OF THE OUTCOMES OF THE FINANCIAL

SYSTEM INQUIRY

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

CANBERRA

2 August 2004

Contact: Amanda Kennedy

02 6277 7340