APRA gets $58m funding boost to enhance supervision

The government has announced that it will boost APRA’s funding by $58.7m and extend the appointment of its chair Wayne Byres despite the criticism the regulator copped from the royal commission.

“The new funding will allow APRA to reinforce the resilience and soundness of our financial system at a time of significant reform,” Treasurer Josh Frydenberg said in a statement.

Besides supervising several industries, APRA’s current agenda includes the implementation of the new Banking Executive Accountability Regime (BEAR) and monitoring and targeting issues in the housing market to retain stability, which it previously dealt with by introducing speedbumps on interest-only and investor lending.

The new funding will be provided over four years to enhance APRA’s supervision across regulated industries and its ability to identify and address new and emerging risk areas, such as cyber, fintech and culture. It will also allow APRA improve its data collection capabilities and provide for a review of its enforcement strategy.

Frydenberg said Byres’ reappointment as chair for another five years was “important for stability during this time of significant reform in Australia’s financial system”.

In the royal commission’s interim report, however, it asked whether the regulatory architecture needed to be changed, and questioned whether APRA’s regulatory and enforcement practices were satisfactory.

“APRA is obliged to look at issues of governance and risk culture through the lens of financial system stability. Understood in that light, APRA’s lack of action in response to the widespread occurrence of the conduct described in this report may, perhaps, be more readily understood,” the report said.

But, the commission said that didn’t excuse APRA from not taking any steps to identify the major banks’ deficiencies in governance and culture as they became increasingly apparent.

“Regulatory complexity increases pressure on the regulator’s resources and may allow entities to develop cultures and practices that are unfavourable to compliance,” the commission wrote.

Prior to this latest funding injection, APRA’s estimated budget for 2018-19 was $682m, according to the royal commission.

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