The role of the Council of Financial Regulators has taken centre stage in Financial System Inquiry submissions and the wider debate about the future of financial regulation, with calls for the body to play a more active role in co-ordinating regulatory activity, for its powers to be increased and its membership expanded.This week the Australian Centre for Financial Studies published a paper by economist Alex Erskine, arguing that the CFR's role and responsibilities needed to be "elevated".Erskine said: "The Wallis [Inquiry, in 1997] inspiration relies on clubby co-operation, is not necessarily proactive and is unaccountable. It has worked well so far but the future is likely to be more testing."Erskine said the CFR should oversee the effectiveness of regulation and review macroprudential policy. He said the system was growing more complex and regulatory gaps were emerging - creating a need for a powerful co-ordinating body.The CFR's members are the Reserve Bank, the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission and Treasury. It meets quarterly and operates as a "high level forum".One recurring theme seen in FSI submissions was the need for regulation to be subject to regular critical examination, something that could be tasked to the CFR. The Australian Bankers Association called for the CFR to be strengthened, saying: "Standards agreed internationally by regulators such as ASIC and APRA are often implemented in Australia without an open assessment of their relevance to Australian conditions or their implications for the Australian economy."It is not clear why Basel III needs to be implemented more conservatively and ahead of the internationally agreed schedule, when it is largely designed to address weaknesses in systems overseas that were not apparent in Australia. "Treasury should be bringing the importance of economic growth to the fore, using its influence in the Council of Financial Regulators."KPMG recommended that all regulations be subject to comprehensive, industry-wide review at regular intervals. This would allow for an assessment of the cumulative impact of regulation across all agencies."This could be achieved by holding annual or six-monthly consultation between the Council of Financial Regulators and the heads of industry peak bodies," KPMG's submission said.It argued for a strengthening of the requirements for costing regulatory proposals, with more rigorous  assessment of compliance costs and efficiency costs and consideration of a broad range of factors, including economic growth, productivity, innovation, trade and investment.Commonwealth Bank called for the CFR's membership to be expanded to include all financial sector regulators and agencies and for it to play a role in ensuring "best practice regulation".CBA said: "Responsible ministers should hold regulatory bodies accountable for improving the transparency of their regulation. Independent auditors should review government and regulatory body compliance with RIA requirements."Other submissions highlighted the need for the CFR to play more of a role in co-ordinating regulation in areas such as payments, where rapid change was creating regulatory gaps and overlaps. PayPal called for Austrac and the Australian Competition and Consumer Commission to be added to the CFR's membership.