When Ian Harper sat on the Financial System (Wallis) Inquiry committee in 1996 the deregulatory push of the 1980s was still driving change. Things have changed since then.Harper, who is a partner in Deloitte Access Economics, said: "There is no longer the acceptance that the market can have its head. We now agree that markets should be regulated.""However, some regulatory interventions are not fit for purpose. We have to ask whether we should have no risk in our financial system or have a system that is designed to take sensible risk."The stability we have been trying to achieve since the GFC is at the cost of innovation. It is a high cost."The financial system inquiry needs to be a blueprint for the future of our financial system."Harper made his comments during a panel discussion, at a lunch in Sydney on Friday, which was organised by Deloitte and the Financial Services Council to discuss the likely direction of the next financial system inquiry.The treasurer, Joe Hockey, has said he will release the terms of reference by December.The Finance Industry Council of Australia, an umbrella group of many industry associations, has fostered debate over the terms of reference for the inquiry.John Brogden, chief executive of the Financial Services Council, said: "The terms of reference will not be written with outcomes already in mind. I believe this will be a very open inquiry. I hope it is very forward looking."The outcome Brogden would like is the creation of an environment where Australia's investment management industry would be able to exploit opportunities for exporting its services.Harper agreed: "We see opportunities for prosperity through financial services. There is demand from the region, and we have a competitive advantage."However, Harper said, he did not want local issues to be overlooked in the drive to develop regional opportunities. "A couple of big areas that are underdeveloped are retirement income policy and dealing with longevity risk."Harper said that when the Wallis committee handed down its report in 1997 it said its ideas would have a life of about 10 years."Since then, the GFC has wrong-footed some of that thinking. In those days the idea of systemic risk was quite narrow; now it covers the whole of the market."