In making recommendations in this chapter, the Inquiry has been guided by the following principles:11
- The system must have highly skilled, effective regulators that are both independent and accountable for discharging their mandates.
- Competition is the cornerstone of a well-functioning financial system and is generally preferred to Government intervention as the mechanism for efficient, resilient and fair outcomes. Policy makers and regulators should minimise barriers to domestic and international competition and seek to encourage competition.
- Regulators and regulation must be forward looking, with the flexibility and capability to cope with a changing environment. Effective regulators need to be able to offer competitive salaries.
- Regulation and regulators should be cost effective, and the benefits of regulation should outweigh the cost. Costs should be allocated to those who create the need for regulation.
- The culture of firms is important and will affect the need for regulation.
11 Drawing on the principles set out in Commonwealth of Australia 2014, Financial System Inquiry Interim Report, Canberra, pages 1–7.