With the Australian Securities and Investments Commission (ASIC) naming and shaming lenders in its
Fees for No Service report, Pat McConnell, honorary fellow at Macquarie University’s Applied Finance Centre, had some strong words when asked why the
Australian Prudential Regulation Authority (APRA) had yet to do the same.
“They are so used to pussy footing around that they won’t actually come out and do something,” he told
Australian Broker.
McConnell believes that one reason why APRA had not gone to the press was that an announcement such as this may affect the share prices of the banks.
“If APRA hints in any way that the banks are less than prudent, the share prices are going to take a real hammering,” he said.
This is in contrast to the Australian Securities and Investments Commission (ASIC) which released a detailed list of lenders that had charged fees for non-existent financial advice on Thursday (27 October).
“Typically both the regulators have pussy footed around and tried not to name and shame but obviously I think [ASIC have] just got so fed up, they’ve decided to go for broke.”
For APRA to do the same, McConnell believed the regulator required a lot more information, especially since they may not have enough from the banks that they’re allowed to disclose.
“It could be that they themselves are very, very prudent with the information that they let out,” he said. “It’s just the culture of trying to work things out in the background rather than have them out in the public.”
McConnell did have some good words to say about APRA and ASIC however.
“I don’t think the banking regulation is that bad. In fact, I think they do an OK job but it’s only OK. It’s not great. They could do a lot better if they were given more leeway to identify misconduct and take action to correct that.”
One major issue, McConnell said, was that the politicisation of APRA and ASIC stifled their ability to act.
“APRA and ASIC are caught in the middle. They can’t really win as long as the regulation is politicised. They’re damned if they do and they’re damned if they don’t.”
A regulator which was not politicised may be more open to publicly criticising institutions for not doing the right thing, he added.
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Mortgage standards a continuing focus: APRA
APRA clarifies stance on interest rate buffers
APRA to put bank risk culture under microscope
