The Wallis Inquiry into the Australian financial system was conducted between 1996 and 1997.
It proposed a new prudential regulator that would combine existing prudential regulation undertaken by several government agencies into one.[1] That regulator became APRA.
The Inquiry proposed a new market–conduct and consumer–protection regulator for financial services.[2] That regulator became ASIC. It was to have comprehensive responsibilities for regulation of market integrity, consumer protection and corporations law. The consumer protection aspect of that regulator’s remit was directed principally towards disclosure.[3] ASIC’s regulation of consumer protection in the financial services industry was to include all types of businesses offering banking and deposit products, insurance products and superannuation, as well as investment products and advisory services.[4]
The Inquiry recommended that the two regulators be operationally autonomous,[5] but work closely together, where appropriate.[6] It proposed separating prudential regulation from market conduct and consumer protection regulation, leaving the Reserve Bank of Australia (RBA) responsible for monetary policy and the payments system. It proposed establishing the Council of Financial Regulators (the CFR), chaired by the Governor of the RBA, to act as a co–ordinating forum, to discuss developments in the financial system and to co–ordinate responses to any areas of concern. The CFR was to have (and now has) no formal mandate or powers separate from those held by its members.
[1] Wallis Inquiry, Final Report, 18 March 1997, 42 Recommendation 31; see also 20.
[2] Wallis Inquiry, Final Report, 18 March 1997, 32 Recommendations 1 and 2; see also 17.
[3] Wallis Inquiry, Final Report, 18 March 1997, 246–52. See also Recommendation 41 at page 46 in respect of superannuation: ‘Regulation to ensure the compliance of superannuation funds, other than excluded funds, with retirement income requirements should be undertaken by [the entity that became APRA] in conjunction with prudential regulation. Disclosure regulation should be undertaken by [the entity that became ASIC]’.
[4] Wallis Inquiry, Final Report, 18 March 1997, 248 fn 5.
[5] Wallis Inquiry, Final Report, 18 March 1997, 67–8 Recommendation 103.
[6] Wallis Inquiry, Final Report, 18 March 1997, 22.