The Inquiry found that while our regulatory architecture does not require major change, regulator accountability and capabilities should be strengthened.
Businesses have told us that they are not given sufficient time to implement regulatory changes, which are often complex. This represents a significant and growing compliance cost for them. In response, we will work with regulators to give businesses appropriate time to implement regulatory changes.
To strengthen the accountability of our regulators, we will review the Statement of Expectations for APRA, ASIC and the Payments System Board and increase requirements for the regulators' annual reports. A greater focus on performance assessment in these documents will ensure regulators are focusing on their capabilities and performance against their mandate.
The Government is already conducting a capability review of ASIC. We will consider any recommendations the review makes to further enhance the capability of ASIC. We will consider the Inquiry's recommendations on adopting a three year funding model for ASIC and APRA and the operational flexibility and staffing arrangements of ASIC and the other financial regulators in light of any findings by the capability review. We will also review ASIC's enforcement regime to ensure it provides a credible deterrent for poor behaviour and breaches of financial services laws. We have also commenced consultation on a model whereby ASIC's regulatory activities would be funded by industry.
We will strengthen the focus on competition in the financial system by explicitly including consideration of competition in ASIC's mandate and tasking the Productivity Commission to examine the state of competition in the financial sector in 2017.
Specific measures:
- By end-2015:
- Complete a capability review of ASIC. Complete consultation on industry funding arrangements for regulatory activities undertaken by ASIC. Appoint new members and revise the Terms of Reference of the Financial Sector Advisory Council.
- By mid-2016:
- Update the Statement of Expectations for APRA, ASIC and the Payments System Board to provide additional guidance about the Government's expectations for their strategic direction and performance and improve regulator accountability. Consider ASIC capability review and, as appropriate, develop legislation to enhance operational capabilities of regulators.
- By end-2016:
- Introduce competition into ASIC's mandate.
- Beyond 2016:
- Commence a review of ASIC's enforcement regime. Task the Productivity Commission to review the state of competition in the financial system