ABSTRACT
In September 1997 the Commonwealth Government of Australia accepted the Report of the Financial System Inquiry (The ‘Wallis Report’) virtually in its entirety. A cornerstone of the recommendations was the introduction of a Twin Peaks architecture for regulating Australia’s financial sector. The experience of the past 15 years has reflected well on this architecture. Not only did the Australian financial system withstand the pressures of the global financial crisis, the sector has exhibited both solid growth and exceptional stability, with remarkably few failures or frauds. While the Australian experiment would be rated successful by most, it has not been without its challenges. This chapter reflects on four key aspects of Australia’s Twin Peaks experience: managing the transition; harmonizing the approaches to regulation; defining the boundaries between the different types of regulation; and interagency coordination. The first section provides some background to the Inquiry and the changes that followed its recommendations.
