The Financial System Inquiry (FSI), tasked with laying out a blueprint for the financial system over the next decade, released its final report on 7 December 2014. Lenders Mortgage Insurance (LMI) was endorsed by numerous industry stakeholders during the inquiry process.
The FSI made various recommendations regarding major banks holding more capital and narrowing the risk weight gap between the major banks and the standardised banks. In discussing risk weights, the FSI recommended that the regulator, APRA, "recognise lenders mortgage insurance where appropriate". Given that standardised banks already receive recognition for risk weights, we interpret this as the FSI referencing the major banks.