Capability review criticizes Australian prudential regulator APRA for being too soft

July 17, 2019

The Australian Prudential Regulation Authority (APRA) faces scathing critique for being too “discreet” and is encouraged to undergo an overhaul of the system.

The capability review came about after the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services found that some regulators had been too slow to react to new challenges. The special inquiry also found that the authority had adopted a preference for operating “behind the scenes” which restricted its potential impact.

After the panel led by Australian Competition and Consumer Commission chairman Graeme Samuel presented its findings, several top bankers lost their jobs due to what Reuters describes as “rampant fee-gauging”.

The capability review found that APRA should become less discreet and to be granted more power. This would include the ability to veto corporate boardroom hires and more flexibility to enforce the law.

The government backed this push by reportedly granting APRA an additional A$150m in funding.

APRA welcomed the 19 recommendations set out in the capability review aimed at restructuring and empowering the organization. The financial sector watchdog also responded that many of the panel’s recommendations had already begun to be implemented.

Wayne Byres, chair at APRA, responded to the review: “The report highlights the increasingly complex industry dynamics in which APRA operates and that the expectations of its role and mandate have increased. Appropriately, the report notes APRA has not stood still in the face of these developments, but highlights the need to accelerate the necessary changes if APRA is to remain a successful prudential supervisor into the future.”

He added: “APRA is committed to ensuring it is fit for the future and the Panel’s recommendations support this. APRA will continue to focus on its primary responsibility to protect the financial well-being of the Australian community as it implements the changes that have been recommended and those APRA already has underway.”