The Treasurer Joe Hockey has announced the appointment of Mr David Murray AO to head an inquiry into Australia’s financial system and the draft Terms of Reference of the inquiry.

Amongst other things, the Inquiry will recommend policy options that:

• promote a competitive and stable financial system that contributes to Australia’s productivity growth;
• promote the efficient allocation of capital and cost efficient access and services for users;
• support individuals and businesses to be reasonably able to manage their finances by understanding risks and rewards in the financial sector;
• foster dynamic and innovative financial service providers.

The Inquiry will take account of the regulation of the general operation of companies through corporations law to the extent these impinge on the efficiency and effective allocation of capital within the financial system.

It will also examine the taxation of financial arrangements, products or institutions to the extent these impinge on the efficient and effective allocation of capital by the financial system.

The Inquiry will take account of, but not make recommendations on the objectives and procedures of the Reserve Bank in its conduct of monetary policy.

Mr Murray will head a Committee of four eminent Australians drawn from the finance, business and academic sectors.

The Committee will draw on the expertise of a Special External Council comprising five international business people to specifically advise on matters relating to international competitiveness and offshore regulatory frameworks and related issues.

Following feedback, final terms of reference and the final composition of the inquiry will be announced in mid-December, with the inquiry to publish an interim report by September 2014 and deliver a final report by November 2014.