Former Commonwealth Bank chief executive David Murray will head the government’s inquiry into Australia’s financial system.

The offices of the Prime Minister and Treasurer announced Mr Murray’s appointment in a joint statement, saying that he will head a committee of four eminent Australians drawn from the finance, business and academic sectors.

According to the statement, the inquiry will reflect the government’s desire for a “root and branch examination of the nation’s financial system”.

It said:

“The inquiry will make recommendations to foster an efficient, competitive and flexible financial system, consistent with financial stability, prudence, integrity and fairness. This should result in less costs, lower fees and greater efficiency in the allocation of capital. As part of our broader deregulation agenda, the Government intends to reduce the regulatory burden on the financial services sector wherever the benefits to competition, efficiency, market stability or consumer protection are questionable.”

The inquiry was a key election promise of Tony Abbott and represents the first time in 17 years that the $5 trillion banking, superannuation, insurance and investment sector has been examined.