The Opposition has promised that a Royal Commission will delve into the financial regulators in order to examine the effects of today’s changing regulatory architecture.
In a speech to the Financial Services Council Leaders Summit 2017 in Sydney yesterday (25 July), Shadow Treasurer Chris Bowen said it was important to understand and scrutinise the roles and accountabilities of Australia’s financial authorities.
He proposed that the Royal Commission would delve into developments in financial regulation in a broad manner, focusing on areas above and beyond poor behaviour.
“It will be a prudent and timely examination of our financial regulation architecture,” he said.
The current system – with APRA handling prudential regulation, the
RBA looking after monetary policy, and ASIC responsible for market conduct – was developed 20 years ago with the Wallis Inquiry, Bowen said.
While
David Murray’s Financial Systems Inquiry of two and a half years ago didn’t make any recommendations of change, the economic and financial environment had shifted since then, he said.
“Given what has changed over the last couple of years and even in the last twelve months alone, the time is ripe for a proper, considered and comprehensive examination of our institutional arrangements – of the financial system architecture.”
Bowen highlighted the following three reasons why the government should look into today’s current financial regulatory architecture:
- The increased level of household debt in Australia
- The ad hoc nature of recent financial and prudential changes
- The rise of fintech and its implications to the financial sector
“There are compelling reasons for a thorough examination of all aspects of financial regulation in Australia,” he said. “The Royal Commission will be a good opportunity, a vital opportunity to do so.”
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