Tim Wilson (Goldstein, Liberal Party) Share this | Hansard source

On behalf of the Standing Committee on Economics, I present the committee's report entitled Review of the Australian Prudential Regulation Authority annual report 2019, together with the minutes of proceedings.

Report made a parliamentary paper in accordance with standing order 39(e).

by leave—The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry found that Australia's financial sector suffered from a lack of moral leadership and a corporate culture motivated by greed. Evidence provided to the royal commission expressed shocking and widespread examples of misconduct, and highlighted systemic failings throughout the banking and financial services sector. Revelations of further misconduct have continued to come to light following the conclusion of the royal commission. The public expects—and deserves—better than a financial sector lacking in moral leadership and motivated by greed. The community expects the banks and other financial institutions to be held to account, and to fear their regulator because it has the power, the authority, the responsibility and the duty to exercise accountability across the sector.

It is essential that we restore trust, eliminate conflicts of interest and raise standards of professionalism in Australia's financial services industry. Governance, culture, remuneration, and accountability risks are core to a healthy and working prudential supervision regime. As demonstrated by the findings of the royal commission and noted by the capability review, these risks must be supervised and monitored as rigorously as traditional financial risks are. This will require not only the efforts of government and of regulators but the efforts and actions of lenders and individuals within the sector. Critical to that is the capability of the prudential regulator in making sure they understand their purpose and their responsibility but also that they have the internal skills to be able to manage their obligations. This was a matter highlighted by the recommendations of the inquiry into the capability of APRA. That inquiry was led by good Goldstein constituent Graeme Samuel, and we appreciate his efforts and ongoing interest.

The government has been working to implement the royal commission's recommendations and strengthen financial regulators, and is investing in improving APRA's capabilities and resources. The government recently commenced work on the extension of the Banking Executive Accountability Regime, or the BEAR, to all APRA regulated entities. This is known as the financial accountability regime, and will increase the transparency and accountability of financial entities, and will improve risk, culture and governance for both prudential and conduct purposes.

Across a series of public hearings, the committee scrutinised APRA's progress regarding the implementation of the royal commission recommendations, the APRA capability recommendations and, of course, its annual report. This important work will continue to strengthen APRA as a regulator and enable it to continue to ensure the raising of standards of governance, culture, remuneration and accountability across the financial services sector. And let there be no misunderstanding, the committee takes this work very seriously. At the end of last year we asked APRA to come and present. Shortly after their presentation, they were advised that the evidence they provided was inadequate. They were recalled to make sure that they exercised their full responsibilities. We continue to scrutinise their work now and into the future. Consistent with the work we're doing in the oversight of the implementation of the Hayne royal commission around the banking sector, insurance, financial advice and superannuation, we continue to recall witnesses and hold them to account to make sure that everybody is following the full recommendations, but also that the committee is understood to be an important part of holding financial services firms and the banking sector to its full accountability.

The committee also scrutinised APRA's new enforcement approach and its commitment to increasing transparency in its supervision and enforcement work. This will assist in both the raising of standards of governance, culture, remuneration and accountability and rebuilding the Australian people's trust in the financial services sector. The committee will continue to scrutinise APRA's performance, particularly its ongoing implementation of royal commission recommendations and the capability review recommendations, as well as the ongoing strengthening of APRA's capability.

On behalf of the committee I would like to thank the chair of APRA, Mr Wayne Byres; the other APRA representatives; and the chair of the APRA Capability Review, Professor Graeme Samuel, for appearing at these important hearings. I also, of course, would like to thank the secretariat, including Mr Stephen Boyd, who ably steers the secretariat and keeps troublesome chairs such as myself in line from time to time, at least in terms of following procedure. I commend the report to the House.

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