The Hayne commission has suggested the formation of a new oversight authority to assess the effectiveness of both the corporate and prudential regulator.
Commissioner Kenneth Hayne called for the new oversight authority for APRA and ASIC to be independent of government, and should be established by legislation to assess the effectiveness of each regulator in discharging its functions and meeting its statutory objects.
“The authority should be comprised of three part-time members and staffed by a permanent secretariat,” he said.
“It should be required to report to the minister in respect of each regulator at least biennially.”
According to Mr Hayne, the legislation to establish the oversight body should:
Mr Hayne said it remains to be determined which entity should assume responsibility for the additional oversight and assessment.
He cited ASIC chair James Shipton’s suggestion that the Council of Financial Regulators (CFR) could be used as the forum for assessing:
However, Mr Hayne said he’s “not in favour of the CFR being charged with the second task”.
“The CFR serves as an important, formal occasion for discussion between the financial regulators. It is essentially a forum for co-ordination between the various regulators,” he said.
“I have already emphasised the importance of regulatory co-ordination. Adding an assessment function to the CFR’s remit would mark a radical departure from the current conception of that body. I do not support such a departure.”
The government agreed with Mr Hayne’s recommendation, noting that an independent assessment of ASIC and APRA’s strategic performance against their overall mandate was lacking.
“The government is committed to maintaining the independence of the financial system regulators. Accordingly, this body will not have the ability to direct, make, assess or comment on specific enforcement actions, regulatory decisions, complaints and like matters,” it said in response.
“The Financial Sector Advisory Council will be disbanded given the establishment of this new body and consideration will be given to streamlining other accountability mechanisms.”
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