While the financial regulatory system in Australia is not broken, the Wallis Inquiry of 1997 was designed for a different era and the blueprint is out of date, Deloitte Access Economics, Partner, Professor Ian Harper has told a CEDA audience in Melbourne.

"The outlook is different from what it was then. The global financial crisis has tipped the balance in favour of stability and away from competition," he said.

Professor Harper said that while stability isn't an inappropriate objective, "somebody has to stand up and wave the flag for competition and innovation".

Now 15 years since the Wallis Inquiry, Professor Harper said we are well overdue for another inquiry because things change so quickly in financial markets and the assumptions that the Wallis Inquiry were built on turned out to be false.

"We built a regulatory framework which was based on a particular vision or view for the way the financial system would evolve at least over the next two years. That particular vision was wrong footed by the Global Financial Crisis in a major way," he said.

"We find ourselves in a situation now where: one we don't have a blueprint anymore… and secondly we have international regulatory agencies that are making it their business to tell us how we should be regulating our system, based on an experience which is extremely different from ours."

"And because we are a capital importing country we really have no choice but to do what they say."

Professor Harper outlined the 10 things a new Wallis-style inquiry should cover:

1. Lessons learnt through the global financial crisis;
2. Contribution of Australia's financial system to the growth and development of the Australian economy;
3. Competition in retail financial markets, especially between banks and non-bank financial intermediaries;
4. The role of capital markets versus financial intermediaries;
5. Systemic risk and the problem of "too big to fail";
6. The future of wealth management, including superannuation;
7. Exposure to developments in global financial markets, including regulation;
8. Scope and powers of Australia's financial regulators;
9. Innovation in Australia's financial system, including the need to encourage new financial instruments and markets; and
10. Developments in payment systems and technology.

The Australian Financial Review, Chanticleer Columnist, Tony Boyd said: "We know we have one of the soundest banking systems in the world… it has survived despite all of the global problems."

"The reason we have such a good system, is because of the Wallis Inquiry," he said.

Mr Boyd doesn't think the system needs to be reviewed or changed and he warned another inquiry could get "out of control".

The problem is that we still haven't seen the legislation for current reforms coming in the next six months, he said.

On the issue of whether the regulators are too focussed on safety and not innovation and competition, Mr Boyd said: "Innovation in Australia's financial system is actually quite extraordinary…Because we have the second highest level of smart phone adoption in world, after Singapore."

"For some reason technology and Australians are like peas in a pod," he said.

"This is leading to dramatic changes in the way in which people are banking."

Mr Boyd said that our financial regulatory system is good and actually well-regarded internationally.

"Our financial system and how its regulated has greatly impressed the Chinese and they themselves would like to learn how we do it," he said.

"I think it's inevitable that, as our economy becomes more integrated with our largest trading partner, that we too will benefit from their savings.

"I believe we'll see, in the next six to eight months or a year, the Australian Government and the Chinese Government coming to an agreement on actually allowing Australian funds managers to distribute their products in, what I think will be, the largest financial services market in the world."

National Australia Bank, Group Manager - Government Affairs and Public Policy, Dallas McInerney, speaking personally about his views on financial sector reform in Australia, said the industry is bogged down in reviews and doesn't need another.

The financial industry is not an industry which has escaped the view of government, the oversight is constant, he said.

While the Wallis Inquiry was a game changer, this would not be the case with the next inquiry, he said.

Don't go and busy a distinguished panel with a shopping list of regulatory asks and a wish list, he warned.

"If I could give some unsolicited advice to an inquiry, it's to hunt antelopes not mice….make it worth your while," he said.

"If the committee allows itself to be distracted by a set of second string objectives and priorities…then it would be a missed opportunity on a huge scale."

Mr McInerney said the biggest issue is the question of wholesale funding for the Australian banks, which he said is a larger question for the whole of Australia about how it funds its own future growth and prosperity.

Australian Centre for Financial Studies, Research Director, Professor Kevin Davis said there's good reasons for another financial sector inquiry, especially since the Wallis Inquiry was based on what are now false assumptions.

"I think there is certainly a role for a new inquiry…(to look at) the way the finance system operates and interacts together," he said.

Professor Davis said the appropriate approach for a new inquiry would be to look at how the system can work better and the way to go is to ask how can it work better and how can we best insure it doesn't break in the future.