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FSI can learn lessons from 1993

FSI can learn lessons from 1993

April 9, 2014 11:39 AM | Posted by Paul Schoff | Print this page

The FSI terms of reference ask: do financial services regulations appropriately balance competition, innovation and efficiency, with stability and consumer protection? David Murray has been talking about how to set that balance requires a look forwards, to produce 'a blueprint that people can come back to'.

The Murray Panel should also look backwards, because many of the relevant competition law principles are known, although they are often forgotten. Markets change, technology changes, consumption patterns change but it is typically a question of applying what we already know to those things.

The Hilmer Report from 1993 is still the state of the art on competition principles and how to apply them consistently and with discipline to regulatory regimes.

Hilmer gave a blueprint. It established a broad principle as follows:

'There should be no regulatory restrictions on competition unless clearly demonstrated to be in the public interest. Governments which choose to restrict consumers' ability to choose among rival suppliers and alternative terms and conditions should demonstrate why this is necessary in the public interest'.

Isn't that a draft blueprint which the FSI can set for future assessment of proposed financial system regulation, as a way of balancing competition with stability?

All proposed financial system regulation should be looked at with discipline to ensure it does not erect barriers to entry, innovation or competition other then when supported by a well articulated and supported rationale of financial stability.

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