Should the FSI revisit the philosophy of financial services regulation?

Pamela F Hanrahan

The Australian Government's Financial System Inquiry (FSI) is charged with, among other things, refreshing the 'philosophy, principles and objectives underpinning the development of a well-functioning financial system'.  However the FSI's Interim Report gives little indication that a fundamental rethink of the dominant 'conduct and disclosure' approach to financial services regulation, derived from principles of capital markets regulation, is on the cards.  While that approach remains a sound basis for regulating securities issuers and participants in capital markets, it is not clear that it provides the right framework for regulating fiduciary intermediaries in the wealth management sector, or providers of consumer financial products and services.