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The updated statements of expectations for the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) will require the regulators to “support growth and productivity through proportionate, risk‑based regulation while continuing to promote financial stability, consumer protection and market integrity”, according to Treasurer Jim Chalmers.
Chalmers said the changes were intended to help Australia’s financial regulators contribute to tackling the nation’s “longstanding productivity challenge”.
“This is all about enabling our financial regulators to unlock more productivity and more growth in our economy,” he said.
“These statements will ensure our financial regulators can help support productivity, unlock investment and grow our economy while preserving financial stability and market integrity and protecting consumers from harm.
“We’re striking the right balance between supporting productivity and investment, reducing the regulatory burden on businesses, promoting stability, and safeguarding our financial system and markets.”
The last statement of expectations for APRA was updated under Chalmers in 2023, while ASIC’s previous statement was issued by Liberal Party ex-treasurer Josh Frydenberg.
Chalmers said the move formed part of the government’s broader productivity agenda, including the Council of Financial Regulators’ roadmap aimed at delivering a more “co-ordinated and efficient” regulatory framework.
“Boosting productivity, unlocking investment and growing our economy while preserving financial stability and consumer protections are high priorities for the Government and now they’ll be reflected more prominently in the work of the regulators too,” he said.
Banks welcome growth focus
The Australian Banking Association (ABA) welcomed the updated statements of expectations, saying the banking sector had been calling for regulators to place greater emphasis on economic growth.
“Getting the balance right is crucial,” ABA CEO Simon Birmingham said.
“Banks recognise the need to ensure these growth mandates are implemented in a way that maintains the strength and stability of Australia’s financial system and protections for customers.”
Birmingham also said the updated expectations would need to be backed by accountability from the regulators.
“The test will be to ensure there is proper accountability and scrutiny of how regulators act on these expectations set out by government. We welcome the requirement for both regulators to report publicly on how they deliver against these expectations,” he said.
“We also welcome strengthened commitments to proportional regulation for smaller and mid-sized banks which will support competition and give customers more choice without lowering protections.”
The Customer Owned Banking Association (COBA) also welcomed the changes.
COBA CEO Michael Lawrence said: “We have consistently advocated for regulation that is proportionate and risk-based, so customer-owned banks can continue to deliver genuine customer choice and robust competition in banking.
“We welcome these updated expectations, which recognise the importance of a diverse banking sector in Australia.”
Lawrence said the updated expectations for APRA, which call for a “proportionate banking regulatory framework” that minimises regulatory burden on smaller banks while maintaining depositor protection and financial stability, aligned with COBA’s longstanding position.
“We welcome a tailored regulatory approach that recognises the distinct models and risk profiles of different banks. This will allow customer-owned banks to focus on what they do best – meeting the needs of their members and communities – while supporting greater competition and choice across the Australian banking sector,” he said.
“Customer-owned banks play an important role in delivering competition and choice for Australian consumers.
“Fit-for-purpose and proportionate regulatory settings will support customer-owned banks in their market-leading service to members and broader communities – and ultimately give Australians more choice.”
[Related: Arca releases fraud correction guidance for credit providers]
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