The Treasurer has issued draft terms of reference for its financial system inquiry, outlining a wide-ranging review and calling for feedback before issuing the final terms of reference in mid-December.Treasurer Joe Hockey also announced yesterday that the inquiry would be headed by the former Commonwealth Bank chief executive and Future Fund chairman, David Murray.The choice of Murray the head the inquiry is the most controversial aspect of yesterday's announcement. A number of commentators have suggested that the inquiry would be best served if it was headed by someone whose background was not in one of the big four banks.Industry lobbying over the past few months for a wide-ranging inquiry has borne fruit. The draft terms of reference include questions of how Australia will fund its growth, domestic and international competitiveness and the cost and quality of financial products.It will look at the question of whether the regulatory system has the right balance between the competing demands of stability and innovation, consumer protection and efficiency.It will even look at the role of new technologies and developments in the payments system.Superannuation will go under the microscope. Murray's committee will be asked to look at changes in the way Australia sources and distributes capital, including the intermediation of savings through banks and non-bank financial institutions.It will look more broadly at "the general operation of companies through corporations law" and also at tax matters, "to the extent they impinge on the efficient and effective allocation of capital".The Treasurer said the committee, whose other members are yet to be named, will draw on the expertise of a special external council, comprising five international business people, to advise on matters relating to international competitiveness and offshore regulation.