The Inquiry Chairman, David Murray, gave a progress report on 1 May, summarising the submissions received.

He identified the key themes and the Inquiry’s next steps:

“In our assessment the submissions point to three fundamental issues that suggest we should not have too high a level of comfort about some current financial system settings:
1.Moral hazard: that is, the expectation that government will stand behind the financial system to prevent or minimise loss.
2.Potential consequences of current system settings for the flow of funds in the financial sector and the economy.
3.Drivers of change – regional and demographic change, but especially technology and innovation.

Responding to these issues will require us to balance objectives of the system, and find trade-offs between efficiency, stability, reliability, fairness and accessibility. It will require policy decisions about appropriate allocation of risk throughout the system….

we are working toward a July release of an Interim Report. Among other things in that Report we’ll be asking you some key questions:
•When would you expect government to step in to prevent losses to consumers? How far should the government go to try to prevent loss?
•Do current system settings prevent our economy from operating and allocating funds efficiently? If so, should we act or wait to see whether other innovations address the risks or unwelcome distortions?
•Is our regulation appropriately calibrated to provide confidence in our financial system while allowing technological change, innovation and entrepreneurship?”