An eminent economist involved in an inquiry which recommended setting up a specialist body to regulate financial institutions says an existing corporate watchdog may have done a better job at protecting consumers.

Professor Ian Harper was a member of the Wallis committee in 1997, an inquiry which probed into the financial system and ultimately recommended the Australian Securities and Investments Commission (ASIC) be set up.

Professor Harper tells Ross Greenwood giving the Australian Competition and Consumer Commission (ACCC) more powers to regulate the financial services industry may have been a better call.

“We thought… while the ACCC has responsibility for consumer protection right across the economy, we felt that because of that it had a lot on its plate.

“And consumer protection in the financial services sector requires special expertise and attention, as we are now seeing.”

Professor Harper admits if the powers had stayed with the ACCC, consumer protection outcomes may have been different.

“We favoured giving the task to a dedicated financial services regulator. Evidently, that has not saved us completely from the sort of things we’re experiencing.

“Had it been given to the ACCC would there have been a different outcome? Well, one thing we do know about the ACCC is it is feared and it is aggressive so maybe we would have gotten a different outcome if it had gone that way instead.”

Professor Harper is also an RBA board member and tells Ross slow wages growth is impeding an interest rate rise in Australia.

“The faster we see wages growing, the faster we’ll see inflation. And when inflation picks up then you’d expect to see interest rates start to rise.

“You won’t see that until you see wages growing.”

Click PLAY below for the full interview