The head of ‘s prudential regulator says his agency has not failed the community in its supervision of financial institutions, after a banking royal commission exposed widespread misconduct in the sector.
n Prudential Regulation Authority chair Wayne Byres has told a hearing in Canberra that the regulator’s job is to ensure the financial system is safe and sound, and that is what it has done.
“There’s absolutely no case at all to say that we have failed,” he told a Senate estimates hearing on Thursday.
“There is no question that the financial system is sound and robust.”
His comments came under questioning by Labor senator Chris Ketter, who said APRA has been referred to as a “hear no evil, see no evil” regulator.
“I reject the depiction,” Mr Byres said.
Senator Ketter also said that the royal commission’s interim report, released last month, noted APRA has never taken a financial institution to court for misconduct.
Mr Byres said APRA’s enforcement measures go beyond legal action.
“I think we do use our tools to achieve change within the industry and to get problems rectified when we see them,” he said.
But he said the regulator is reviewing its “enforcement philosophy”, governance of enforcement decisions and the resources it commits to keeping institutions in line.
APRA has flagged in its submission to the royal commission that it could potentially employ stronger enforcement powers to achieve “general deterrence” across the industry, he added.
Mr Byres said robustness of the financial system hasn’t made evidence at the royal commission any less “confronting or uncomfortable”.
But the soundness of the system will help the financial sector make the improvements it needs to, he said.
“We are thankfully working on these from a position of financial strength.”
Royal commissioner Kenneth Hayne released a scathing three-volume interim report in September, highlighting an insidious culture of greed and profit over basic decency permeating the big banks.
He also took aim at regulators for cosying up to financial services firms and striking limp deals in response to systemic misbehaviour rather than pursuing tough prosecutions.