This paper examines the challenges associated with setting or recalibrating “the philosophy, principles and objectives underpinning the development of a well-functioning financial system”, a core term of reference for the Australian Financial System Inquiry. The current philosophy is informed by an emphasis on structure, leaving it to market participants to self-police through a combination of rules and principles. It is informed by a high degree of trust in market ordering and acceptance of conflicts of interest as long as they are managed, thereby delivering beneficial outcomes. Specialisation and expertise are deemed to ensure that risk-taking takes place in fair, orderly and transparent markets. The global financial crisis has severely tested that assumption. As in other markets, trust in the integrity of financial markets and their participants has evaporated. The key policy question is whether the operation of the financial system is, in the vernacular, “fair dinkum”, according to or deviating from Australian belief in fairness. The paper explores the defects in the regulatory paradigm through each of the key themes: (i) balancing competition, innovation, efficiency, stability and consumer protection; (ii) how financial risk is allocated and systemic risk is managed; (iii) assessing the effectiveness and need for financial regulation, including its impact on costs, flexibility, innovation, industry and among users; and (iv) the role of government; and the role, objectives, funding and performance of financial regulators including an international comparison. The evaluation demonstrates profound limitations with the current paradigm. We argue that culture is a critical driver of behaviour. It can justify, embed or restrain action but ought to do so in light of institutional purpose. Unless the underpinning philosophy defines duties and responsibilities as well as rights, and links this to a framework that place culture at its core, we risk failing to learn from history. This would be both tragedy and farce.