Mr Pearce says lightening the regulatory burden on the financial services industry is crucial for a well-functioning economy.

Speaking last week at the Investment and Financial Services Association lunch, he said the Financial Services Reform Act is characterised by “teething troubles” despite its creators’ best intentions.

With a review of the Act under way, Mr Pearce says industry feedback is positive about the Act’s intentions but critical of its implementation.

“Industry took up the challenge of communicating its experiences to the Government, in the hope that balance could be achieved,” he said. “Industry told me that the… philosophy and principles were right, but that they were drowning in business regulation and compliance costs.

“Very quickly, I heard the resounding note: the imbalance could cost us all.”