The Australian Securities and Investments Commission and the Australian Prudential Regulation Authority will both get significant funding increases this year to “restore trust” in the finance sector.
Treasurer Josh Frydenberg said the regulators would both be allocated “additional funding” — $400 million for ASIC and $150m for APRA — in the 2019-20 budget next Tuesday as part of the Coalition’s response to the Hayne Royal Commission.
Frydenberg compared the upcoming 2019-20 allocations to what the agencies received “on average” in the 2017-18 financial year; ASIC would get 25% more than in the year ending last June, and APRA would see a 30% increase.
The opposition has argued that funding for the two agencies has fallen in real terms each year since the Coalition came to power in 2013, leading to a cumulative shortfall of about $200m. Frydenberg claims the April 2 budget will increase what is “already record funding” for both; and of course, both statements can be true at once.
Frydenberg said this would allow the financial regulators, which were widely criticised as being too soft following the inquest, to “strengthen and intensify their approach to enforcement and take on expanded responsibilities to stamp out misconduct in our financial sector”.
He said ASIC’s extra money would go towards:
- An accelerated enforcement strategy.
- Expanded regulation of financial services in accordance with the Royal Commission recommendations, specifically in relation to credit, financial advice and insurance.
- Enhanced on-site supervision of larger institutions.
- An expanded role as the primary conduct regulator for superannuation.
- A new role in administering a conduct-focused accountability regime.
The additional funding for APRA has also been earmarked for specific plans:
- Extend the Banking Executive Accountability Regime (BEAR) to all APRA-regulated entities including insurers and superannuation funds.
- Boost supervision intensity across APRA-regulated entities, including a strong focus on underperforming superannuation funds and members outcomes.
- Enhance the supervisory framework for governance, culture and remuneration applying to all APRA-regulated entities, including through building internal technical expertise and accessing technical specialists outside of APRA, supporting APRA’s response to key areas of concern raised by Commissioner Hayne.