The House of Representatives Standing Committee on Economics acknowledged the efforts of the Australian Prudential Regulation Authority (APRA) to push for better and responsible lending practices in the country’s financial sector. However, this came with a reminder from Committee Chair Sarah Henderson MP, who said that “there is still a lot of work to be done in this area.”
Henderson shared this sentiment during the review of APRA’s 2017 annual report. The committee’s concerns were brought up during the public hearing in Canberra earlier this year.
During the public hearing, the committee evaluated APRA’s efforts to solve issues of governance, risk management and culture in financial institutions. Specifically, the committee analysed existing regulations to ensure sound lending practices and maintain the stature of Australian banks.
Additionally, new efforts to improve APRA’s prudential oversight tools were discussed, including the Banking Executive Accountability Regime (BEAR).
“BEAR will provide mechanisms to make senior bank executives more accountable and subject to additional oversight by APRA,” Henderson said, as “strengthening accountability measures for senior executives was a key recommendation of the committee’s Review of the Four Major Banks.”
BEAR will take effect on 1 July 2018 for the major banks, while a transition period will be in place for smaller lenders.
Other solutions discussed included the introduction of new crisis management powers to empower APRA to better address crises in Australia’s financial system and proposed changes to superannuation. The overall goal is to improve governance and transparency in the industry.
The Standing Committee on Economics is a government body that has the power to inquire into and report on any matter referred to it by either the House or a Minister, including any pre-legislation proposal, bill, motion, petition, vote or expenditure, other financial matter, report or document.
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