In 1997, the Wallis probe examined the results of deregulation on the domestic financial system and resulted in the creation the Australian Prudential Regulation Authority (APRA). Incoming treasurer Joe Hockey had previously prepared Australia for the 'son of Wallis' – a new probe into the country's financial system.
With a Coalition government now in office, a spokesperson for Mr Hockey says the inquiry it will be one of his "very first tasks". According to The Australian there is speculation that former Commonwealth Bank (ASX: CBA) chief David Murray could lead the review.
The inquiry will focus on the changes and developments since the Wallis probe and in particular the impact of new technology and Australia's superannuation environment. ANZ (ASX: ANZ) chief executive Mike Smith believes it will also give the industry an opportunity to examine the regulatory changes since the GFC and understand how the financial system can "effectively support the economy as it adjusts to the requirements of the 21st century".
Rather than focusing on the smaller issues like foreign ATM fees, many in the industry are calling for a review into the larger issues faced by some of our biggest institutions. However Australian Bankers Association CEO Steven Munchenberg said although it should focus on topics such as infrastructure and funding of the economy (something National Australia Bank's (ASX: NAB) CEO Cameron Clyne recently said was important for the country's future), "I'm sure everything from foreign ATM fees through to whether there's enough branches in rural Australia will get raised."
Foolish takeaway
An inquiry into Australia's financial system will be welcomed by major banks and businesses but will take time to plan and complete. Our banks are some of the safest financial institutions in the world, but constantly scrutinising them will only make the industry better. Our banks are great businesses and although they may not be a 'buy' for investors right now, they are still on our watchlists.
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Motley Fool contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.
