A financial industry analyst has called for a review of the sector’s governance, warning that it has become a “corporate piggy bank” and a “fraud machine”.
The Federal Reserve’s chief economist, Paul Ashworth, has also called for the government to create a “financial industry committee” to review the industry’s governance and to look at how the financial sector can support growth.
“The financial sector has become an oligopoly,” Mr Ashworth told the Financial Times on Monday.
“It has become the biggest financial services company in the world, but it has lost control of its governance.”
They have made the financial system more vulnerable, and there is an obvious danger that they will do it again.
“The Federal Treasury is responsible for managing the financial markets and oversight of financial institutions, but there is no centralised regulator.
That’s a lot of money,” Mr Kavanagh said. “
In Australia, we’ve lost $15.3 billion in value in the past year.
That’s a lot of money,” Mr Kavanagh said.
The Federal Treasurer, Scott Morrison, has promised to bring the sector back into the financial market, but said the government would not allow a review.
“We’re going to make sure the financial industries are operating with the best interests of Australian taxpayers in mind,” Mr Morrison said.
Mr Ashworth’s warning comes as Australia’s banking industry has been hit hard by the crisis, with many of its biggest names losing millions of dollars.
Australian bank assets have dropped by $6.3bn since November.
The banks’ biggest losses came from their Australian operations, with the loss of $1.9bn from their Commonwealth headquarters alone.
More than $1bn was also wiped out by the banks’ assets in their overseas operations, as well as their Australian divisions.
The crisis also saw the loss in Australian dollar strength of more than 30 per cent, with analysts estimating that the Australian dollar lost about 10 per cent of its value over the past 12 months.
Mr Ashwin’s comments came as Mr Morrison was making his first appearance in Parliament since the crisis.
He said the Government would be taking a “diligent” approach to the crisis and would look at “all the options” to recover the banks.
He also said the banking sector needed to be more transparent.
“If we were going to have a transparent, transparent, open and accountable banking system, then there has to be an open and transparent, accountable and transparent banking system,” Mr Morrison said.
“I think that’s the most important thing we can do to ensure that this is not going to happen again.”
Australia’s Financial Services Commission was set up in 2014 by the Government to oversee the financial institutions that underpin the Australian financial system.