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The Federal Government is yet to indicate how it is going to manage an exit strategy from the bank deposit guarantee, leaving the financial services industry with a considerable unknown, according to the deputy chief executive officer of the Investment and Financial Services Association (IFSA), John O’Shaughnessy.
O’Shaughnessy told a Pensions and Investments Summit on the Gold Coast that he believed it was possible that the Government would opt to leave the guarantee in place in some form, but it was a question of what it would then look like.
His comments came in circumstances where a number of mortgage funds remained frozen, but O’Shaughnessy said he believed the Government’s decision to implement the guarantee had been correct given the circumstances at the time and notwithstanding the market distortions it had then created.
He said there was a danger the financial services industry would be confronted by significant regulatory change flowing from the global financial crisis and from that change would flow higher compliance costs.
However, O’Shaughnessy warned that the Government needed to look at its own specific set of circumstances and its own regulatory system.
“We need to look at fixing what is broken and not follow what is happening overseas,” he said. “Nor should we lose sight of the value of competition.”
