BILLS DIGEST NO. 73, 2020–21    18 June 2021

Financial Regulator Assessment Authority Bill 2021 [and] Financial Regulator Assessment Authority (Consequential Amendments and Transitional Provisions) Bill 2021

Ian Zhou
Economic Policy Section

The Bills Digest at a glance

Purpose of the Bill

Structure of the Bill

Background

Committee consideration

Policy position of non-government parties/independents

Position of major interest groups

Financial implications

Statement of Compatibility with Human Rights

Key issues and provisions

Other provisions

Concluding comments

Date introduced: 13 May 2021

House: House of Representatives

Portfolio: Treasury

Commencement:

The Principal Bill—the day after the Bill receives Royal Assent or 1 July 2021, whichever occurs later.

The Consequential Amendments Bill—the start of the day after the Consequential Amendments Bill receives Royal Assent or when the Principal Bill commences, whichever occurs later.

Links: The links to the Principal Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

The links to the Consequential Amendments Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at June 2021.

1 The Bills Digest at a glance

Background

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Banking Royal Commission) criticised the Australian Securities & Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) for failing to appropriately punish misconduct in the financial services industry. The Banking Royal Commission recommended the establishment of a new oversight body for ASIC and APRA.

What the Bill does

The Financial Regulator Assessment Authority Bill 2021 establishes a statutory body to assess the effectiveness and capability of ASIC and APRA.

The Bill arises from the Government’s commitment to implement recommendations 6.13 and 6.14 of the Banking Royal Commission.

Purpose of the Bill

This Bills Digest relates to two Bills comprising:

• the Financial Regulator Assessment Authority Bill 2021 (the Principal Bill) and

• the Financial Regulator Assessment Authority (Consequential Amendments and Transitional Provisions) Bill 2021 (the Consequential Amendments Bill).

The purpose of the Principal Bill is to establish the Financial Regulator Assessment Authority (FRAA or the Authority) as a statutory body. The FRAA will be charged with assessing the effectiveness and capability of ASIC and APRA.

The Consequential Amendments Bill deals with matters necessary to enact the Principal Bill and to enable the disclosure of protected information to the FRAA.

2 Structure of the Bill

The Principal Bill is divided into five parts:

• Part 1 outlines the object underpinning the Bill and defines key terms

• Part 2 establishes the FRAA and sets out its functions and powers

• Part 3 sets out the terms and conditions of appointment for FRAA’s members and staff

• Part 4 deals with information management matters and includes an offence for unauthorised use or disclosure of protected information

• Part 5 deals with miscellaneous matters, including protection from liability; delegations; and disallowable legislative instruments.

3 Background

The ‘Twin Peaks’ model of financial regulation

Banks, insurance companies and superannuation funds play a key role in the economy because they provide credit and financial services to businesses and consumers. If financial institutions fail or misbehave, then they could cause substantial loss to many customers and this may have economy-wide implications, as happened in the 2008 Global Financial Crisis when the American investment bank Lehman Brothers collapsed.¹

Governments typically regulate the financial services industry to:

• reduce systemic risk of failure of the financial system

• prevent financial institutions from defaulting on their promises or breaching duties to customers and members

• protect consumers from abuses and illegal activities.

In Australia, regulation of the financial services industry is primarily the responsibility of two independent regulatory agencies: the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA). This is commonly referred to as the ‘Twin Peaks’ model of financial regulation, which is characterised by two independent regulatory bodies that are equal in importance.²

ASIC is Australia’s corporate conduct regulator and is responsible for maintaining good market conduct and consumer protection.³ In other words, ASIC regulates the conduct of Australian companies, financial services institutions, and professionals who operate in those sectors.

APRA is Australia’s prudential regulator and is responsible for promoting financial system stability.⁴ In other words, APRA regulates financial institutions to reduce the risks of these institutions from failing or collapsing.

Figure 1 below shows the areas of responsibility that the twin regulators share.

Figure 1: Australian ‘Twin Peaks’ of financial regulation

Source: APRA, ‘APRA and ASIC: a new era in cooperation’ (2020)

The Banking Royal Commission

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (the Banking Royal Commission or Hayne Royal Commission) was established in December 2017 by the Australian Government to inquire into and report on misconduct in the banking, superannuation and financial services industry. The Banking Royal Commission interim report and final report were tabled in Parliament on 28 September 2018 and 4 February 2019 respectively.

The Banking Royal Commission found evidence of conduct by many financial services entities that caused substantial loss to many customers.⁵ The conduct of these financial services entities often broke the law or fell short of community expectations.⁶

Criticism of ASIC and APRA by the Banking Royal Commission

The Banking Royal Commission also criticised ASIC and APRA for failing to punish misconduct and impose appropriate penalties:

When [financial services entities’] misconduct was revealed, it either went unpunished or the consequences did not meet the seriousness of what had been done. The conduct regulator, ASIC, rarely went to court to seek public denunciation of and punishment for misconduct. The prudential regulator, APRA, never went to court. Much more often than not, when misconduct was revealed, little happened beyond apology from the entity, a drawn out remediation program and protracted negotiation with ASIC of a media release, an infringement notice, or an enforceable undertaking that acknowledged no more than that ASIC had reasonable ‘concerns’ about the entity’s conduct.⁷ [emphasis added]

As a result, the Banking Royal Commission found that some financial institutions developed a mindset that regulatory compliance was merely a ‘cost of doing business’ rather than a mandatory or minimum standard for conducting their business.⁸

The Banking Royal Commission final report contains 76 recommendations aiming to improve the Australian financial services industry,⁹ some of which are directed at ASIC and APRA, particularly:

• Recommendation 6.13 – Regular capability reviews

APRA and ASIC should each be subject to at least quadrennial capability reviews.¹⁰ A capability review should be undertaken for APRA as soon as is reasonably practicable.¹¹

• Recommendation 6.14 – A new oversight authority

A new oversight authority for APRA and ASIC, independent of Government, should be established by legislation to assess the effectiveness of each regulator in discharging its functions and meeting its statutory objects.

The authority should be comprised of three part-time members and staffed by a permanent secretariat.

It should be required to report to the Minister in respect of each regulator at least biennially.¹²

The Government’s response to the Banking Royal Commission

On 4 February 2019, the Government released its response to the Banking Royal Commission Final Report,¹³ which committed, amongst other things, to taking action on recommendations 6.13 and 6.14.¹⁴

In his second reading speech for the Principal Bill, the Assistant Treasurer Michael Sukkar explains:

The Bill will create the Financial Regulator Assessment Authority (FRAA), which will be charged with assessing the effectiveness and capability of the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC).

This will fulfil the Government’s commitment to implement recommendations 6.13 and 6.14 of the Financial Services Royal Commission).¹⁵ [emphasis added]

This Bill is one of a number of Bills that have arisen from the Government’s commitment to implement the recommendations of the Banking Royal Commission.

Table 1 below shows the legislation has been enacted in response to the Royal Commission’s recommendations.¹⁶

Table 1: legislation addressing the recommendations of the Banking Royal Commission

Recommendations addressed

Relevant legislation

6.1, 6.2

Financial Sector Reform (Hayne Royal Commission Response—Stronger Regulators (2019 Measures)) Act 2020

1.2, 1.3, 4.2, 4.7

Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2019 Measures)) Act 2020

1.6, 1.15, 2.7, 2.8, 2.9, 3.1, 3.4, 3.8, 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.8, 6.3, 6.4, 6.5, 6.9, 6.11, 7.2

Financial Sector Reform (Hayne Royal Commission Response) Act 2020 and Corporations (Fees) Amendment (Hayne Royal Commission Response) Act 2020

2.1, 2.2, 3.2, 3.3

Financial Sector Reform (Hayne Royal Commission Response No. 2) Act 2021

6.13, 6.14

The Principal Bill and the Consequential Amendments Bill

Why is there a need to create FRAA?

The Explanatory Memorandum (EM) to the Principal Bill acknowledges that ASIC and APRA are already subject to an array of external assessment and oversight mechanisms, including ministerial oversight and scrutiny by parliamentary committees (For example, Senate Estimates hearings).¹⁷

However, the Banking Royal Commission found:

… parliamentary oversight necessarily has some limitations. Those limitations include the amount of time that can be devoted to a particular entity or topic, the time available to committee members to prepare for the hearings and the training, skill and experience of the members of the committee, who will sometimes need to review and assess complex information on matters of expertise.¹⁸ [emphasis added]

Put simply, parliamentary committee members may lack the time and specialist skills to regularly assess the effectiveness and capability of ASIC and APRA. As such, the Banking Royal Commission argued that there is a need to create an independently chaired body to regularly review and report on the performance of the twin regulators.

4 Committee consideration

Senate Standing Committee for the Scrutiny of Bills

At the time of writing, the Senate Standing Committee for the Scrutiny of Bills had not considered the Bills.¹⁹

Senate Standing Committee for the Selection of Bills

At its meeting of 13 May 2021, the Senate Standing Committee for the Selection of Bills deferred consideration of the Bill to its next meeting.²⁰

5 Policy position of non-government parties/independents

Australian Labor Party

The Australian Labor Party (ALP) has indicated a general support for the Bills, however, the ALP has also criticised the Government for being too slow to implement the recommendations of the Banking Royal Commission.

During the second reading debate for the Principal Bill, Mr Stephen Jones MP said:

The Financial Regulator Assessment Authority that this legislation will establish should have been established eight years ago. It will bring extra scrutiny and accountability to our financial regulators …

We support the legislation. We think it is a step in the right direction.²¹ [emphasis added]

The Greens

The Greens has taken a similar policy position to the ALP.²² The Greens has indicated general support for the Bills but criticised the Government for taking too long to address misconduct in the financial sector.

For example, in a media release Senator Nick McKim said:

The Liberals had to be dragged kicking and screaming into this Royal Commission, and they have never accepted that there is serious criminality and bad behaviour within the sector …

By delaying or abandoning most of the recommendations, they have made it clear that they are quite happy for people to continue to fall victim to the banks’ predatory conduct.²³

Position of major interest groups

ASIC and APRA

ASIC and APRA have both stated that they will be proactive in working with the FRAA.

In a statement regarding the implementation of Royal Commission recommendations, ASIC announced it welcomes the call for greater regulator accountability with the planned establishment of a new oversight body:

We will be proactive in working with the new oversight body to develop regulatory performance measurement frameworks that provide a public mechanism for monitoring our effectiveness, with particular focus on the level of impact ASIC’s work has on the overall fairness, strength and efficiency of the Australian financial system. ²⁴

In a speech delivered at an Australian Institute of Company Directors breakfast event, APRA’s Deputy Chair Helen Rowell said:

We are also engaging with Government to support Commissioner Hayne’s recommendation that a new oversight body be created for APRA and ASIC. With consultation on the draft legislation now underway, APRA is working with the Government to ensure the new Financial Regulator Assessment Authority is well placed to provide the Government with an effective assessment of regulator performance against their respective mandates.²⁵

Consumer advocacy groups

Consumer advocacy groups have commented that the Exposure Draft of the Principal Bill does not adequately focus on the interests of consumers. The comments are likely to be relevant for the Principal Bill which does not differ greatly from the Exposure Draft.

The Financial Rights Legal Centre (FRLC), CHOICE, and the Consumer Action Law Centre, made a joint submission to the Treasury in the consultation process following the release of the Exposure Draft of the Bills. In their joint submission, the three consumer advocacy groups cautioned:

In its current drafting, we are not convinced the Authority [i.e. FRAA] will achieve better outcomes for consumers, which should be its core purpose.²⁶

The three consumer advocacy groups recommended changes to the Principal Bill to ensure that the ‘focus of the Authority [FRAA] in exercising its duties remains on enhancing consumer wellbeing, rather than furthering industry interests.’²⁷

For example, the consumer advocacy groups recommended:

In assessing the effectiveness of regulators, the Authority’s core focus should be on whether regulators are improving outcomes for consumers. The Treasury must codify this principle in the objective of the legislation.²⁸

The consumer advocacy groups’ recommendations regarding changes to the Exposure Draft Bills are not adopted in the Principal Bill.

6 Financial implications

According to the Explanatory Memorandum to the Bills, in the 2019–20 Budget the Government provided $7.7 million over three years from 2020–21 to establish the Authority.²⁹

7 Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bills’ compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bills are compatible.³⁰

Parliamentary Joint Committee on Human Rights

At the time of writing, the Parliamentary Joint Committee on Human Rights had not considered the Bills.³¹

8 Key issues and provisions

Part 1—Object

Part 1 of the Principal Bill outlines the object underpinning the Bill and defines key terms.

Clause 3 states that the object of the Bill is to provide for the independent assessment of ASIC and APRA’s effectiveness and capability.

Clause 4 provides a simplified outline of the proposed Act.

Clause 5 defines key terms in the Bill.

Clause 7 specifies that this Bill, once enacted, will extend to conduct outside Australia.

Commentary from the Explanatory Memorandum

There is a presumption that generally the Parliament does not intend Australian legislation to apply outside of Australia.³² However, this presumption can be rebutted by clear words to the contrary.³³

Clause 7, by express words, specifies that this Bill will extend to conduct outside Australia once it is enacted. The Explanatory Memorandum to the Principal Bill explains this is to ensure that the offence for unauthorised disclosure of protected information applies to all entrusted persons working in relation to the Authority, whether in Australia or elsewhere (see Clause 40).³⁴

Part 2—Establishment, functions, and cooperation

Part 2 of the Principal Bill establishes the FRAA (the Authority) and sets out its functions and powers.

Clause 9 establishes the Authority.

Clause 10 provides that the Authority consists of four members: a Chair (appointed by the Minister), a Departmental member, and two other members appointed by the Minister.

Clause 12 sets out the functions of the Authority. The main functions of the Authority are to assess and report to the Minister on ASIC and APRA’s effectiveness and capability.

Commentary from parliamentarian

Clause 12 indicates that the role of the FRAA is to report on ASIC and APRA’s effectiveness and capability. The FRAA does not have the powers to interfere with specific enforcement cases or regulatory decisions of ASIC and APRA.

During the second reading debate for the Principal Bill, Dr Katie Allen MP said:

ASIC and APRA have operational independence and are not unreasonably impacted, the Financial Regulator Assessment Authority will not have the ability to direct, make, assess or comment on specific cases of the regulators' enforcement actions, regulatory decisions, complaints and like matters.³⁵

Clause 13 specifies that the Authority must undertake its assessment of ASIC and APRA once every two financial years starting on 1 July 2021. These are referred to as biennial assessments (as opposed to ad hoc assessments described in clause 14). The Minister may request the Authority to consider or not consider particular matters when undertaking an assessment of effectiveness.

Clause 14 specifies that the Authority must undertake ad hoc assessments of ASIC and APRA’s effectiveness and capability when requested by the Minister.

Clause 16 specifies that the Authority must give a copy of its proposed assessment report to ASIC and APRA before giving the final report to the Minister. Furthermore, if the recipient of the proposed report gives written comments to the Authority, the Authority must consider the comments. When giving a final report to the Minister, the Authority must also give a copy to ASIC or ASIC. Such reports may not be published unless already tabled in Parliament. Biennial reports must be tabled in Parliament within 20 sitting days after the report is received by the Minister (clause 17).

Clause 19 deals with the independence of the Authority. It provides that the Authority has full discretion in performing its functions and exercising its powers and is not subject to directions by anyone in relation to how an assessment is conducted and the content of a report to the Minister. This independence is subject to the Bill and other laws of the Commonwealth. However, the note to clause 19 points out that this should be read in conjunction with clauses 13(2) and 14(1) that provide that the Minister may request the Authority to consider or not consider particular matters or to assess and report on a particular matter (see above).

Commentary from the media

Editorial in the Australian Financial Review warned that the establishment of FRAA could lead to a concentration of regulatory power to the Treasurer. The Authority reports to the Treasurer. The Treasurer also appoints three out of four FRAA’s members by written instrument and may request the FRAA to report on matters relating to ASIC and APRA’s effectiveness on an ad hoc basis (see clauses 10 and 14).

The editorial said:

One Hayne legacy will remain: a new regulatory watchdog will be appointed over the top of ASIC and the prudential regulator APRA. Rather than the independent regulatory body envisaged by Mr Hayne, however, this is more likely to be Mr Frydenberg’s way of ensuring that ASIC now operates as the Treasurer intends.³⁶ [emphasis added]

Clause 20 specifies that ASIC and APRA and their members and staff are required to cooperate with and provide information to the Authority to the extent reasonably necessary to enable it to perform its functions and exercise its powers.

Clause 21 specifies that a person is not excused from giving information to or answering questions from the Authority on the ground that to do so would disclose material protected by legal professional privilege. An offence for unauthorised use and disclosure of protected information is specified in Part 4 of the Principal Bill and discussed further below.

Part 3—Members and staff

Part 3 of the Principal Bill sets out the terms and conditions of appointment for the Authority’s members and staff.

Clause 23 specifies that the Departmental member of the Authority must be either the Secretary of the Department (that is, the Secretary to the Australian Treasury) or a Senior Executive Services (SES) employee nominated by the Secretary.

Commentary from consumer advocacy groups

In a joint submission to the Treasury in the consultation process following release of the Exposure Draft of the Bills, the Financial Rights Legal Centre, CHOICE, and the Consumer Action Law Centre said:

The Final Report of the Royal Commission was clear - this body should be “independent of Government.”

We do not believe it is appropriate for a current member of Treasury or any government department to be appointed to this role.

It is more appropriate for Department staff to instead advise and support the work of the Authority.³⁷

Clause 24 specifies that the three other members of the Authority are to be appointed by the Minister by written instrument. In making the appointment, the Minister must, to the extent reasonably practicable, ensure that the members collectively possess the skills and qualifications necessary for the Authority to perform its functions.

Subclause 26(1) specifies that the Minister may, by written instrument, appoint a person to act as an appointed member under certain circumstances (for example, vacancy, appointed member’s absence from duty).

Subclause 26(2) specifies that the Minister may, by written instrument, appoint an appointed member to act as the Chair under certain circumstances.

Clause 30 specifies that an appointed member of the Authority must not engage in any paid work, that, in the Minister’s opinion, conflicts or could conflict with the proper performance of the members’ duties.

Commentary from consumer advocacy groups

In regard to clause 30, Consumer advocacy groups said:

There should be further, strict guidance about what constitutes a conflict. At minimum, we expect that people employed by or recently employed by any APRA or ASIC regulated entity could not be appointed.

It is also essential that at least one member of the Authority has experience in and understanding of consumer protection. The Bill should be amended to require this.³⁸

Clause 37 allows the Department’s Secretary, on behalf of the Commonwealth, to engage consultants to assist in the performance of the Authority’s functions.

Part 4—Information management

Part 4 of the Principal Bill deals with information management matters including the use and disclosure of protected information and an offence for unauthorised use.

Protected information is defined in clause 5. It means certain kinds of information obtained by the Authority from APRA or ASIC (the source agency). The list of the kinds of information includes:

• information that a person is prohibited from disclosing under a law of the Commonwealth (other than the Principal Bill) or a law of a state or territory

• information, the disclosure of which, would, or could reasonably be expected to, found an action for breach of a duty of confidence

• information protected against disclosure by legal professional privilege

• information the disclosure of which would have negative effects. For example, these could include disclosures:

– could reasonably be expected to prejudice the security, defence or international relations of Australia

– could reasonably be expected to prejudice enforcement related activities

– would involve unreasonably disclosing personal information.

Clause 39 specifies that the Authority must not include protected information in its reports. Furthermore, before the Authority gives a report to the Minister, it must consult with ASIC and APRA respectively to ensure that protected information is not included in the reports. This clause can be read together with Clause 21.

Clause 40 specifies that an entrusted person commits an offence if the person uses or discloses protected information in ways that are not authorised. Circumstances that constitute authorised use of protected information are set out in clauses 42 to 45.

Entrusted person is defined in clause 5 and the definition encompasses the Authority’s members, the Secretary of the Department, APS employees, and consultants or contractors who work for the Authority.

The offence of unauthorised disclosure of protected information is punishable by imprisonment for up to two years.

Clause 41 deals with the limit on disclosure of protected information to courts and tribunals.

Clauses 42 to 45 set out circumstances that constitute authorised use of protected information:

• use and disclosure of protected information for the purpose of this Bill (subclause 42(a))

• use and disclosure of protected information in performing functions or exercising powers under a law of the Commonwealth as an entrusted person (subclause 42(b))

• use and disclosure of protected information in performing duties for the Authority as an entrusted person (subclause 42(c))

• disclosure of protected information to the Secretary, APRA or ASIC (clause 43)

• use and disclosure of protected information for the purposes of enforcement related activity (clause 44)

• use and disclosure of protected information that is certified as necessary in the public interest by the Secretary (clause 45).

Part 5—Miscellaneous matters

Part 5 of the Principal Bill deals with miscellaneous matters.

Clause 47 deals with protection from liability. Members, staff, and consultants of the Authority are not liable in any civil proceedings for loss, damage or injury suffered by another person, for any act or omission done in good faith in carrying out their duties for the Authority. The same protection is provided to ASIC and APRA staff when providing information to the Authority in accordance with the Bill. This clause may be viewed as similar to a ‘Good Samaritan protection’ provision in civil liability laws that says a person who is acting in good faith to help someone in emergency need is generally protected from any personal liability that arises from the situation (exceptions apply).

Clause 48 deals with delegation by the Minister. The Minister may in writing, delegate some functions or powers to the Secretary of the Department or a Senior Executive Services (SES) employee or acting SES employee in the Department (but not a staff member of the Treasury). The functions that can be delegated are functions under subclause 26(2) and clause 28, which relate to appointment of an acting Chair and power to grant leave of absence, respectively.

Clause 49 deals with delegation by the Authority. Subclause 49(1) specifies that the Authority may, in writing, delegate some functions or powers to a member or staff member. The functions that can be delegated are functions under subclause 16(1), subclause 16(3), and subclause 39(2), which relate to reports to be given to APRA or ASIC and protected information not to be included in the Authority’s reports.

Subclause 49(2) specifies that the Authority may, in writing, delegate functions or powers under subclause 20(2) to a member or a staff member who is classified as an Executive Level 2 or above. Subclause 20(2) relates to cooperation of APRA and ASIC with the Authority.

Clause 50 deals with delegation by the Secretary. The Secretary may, in writing, delegate some functions or powers to an SES or acting SES employee in the Department. The functions that can be delegated are functions under clauses 36 and 37, which relate to staff and consultants’ arrangements.

Clause 51 provides that the Minister may, by legislative instrument, make rules prescribing matters required or permitted by the Act, or necessary or convenient to be prescribed for carrying out or giving effect to the Act. The rules may not create an offence or civil penalty; provide powers of arrest, detention, entry, search or seizure; impose a tax; set an amount to be appropriated; or directly amend the Act.

9 Other provisions

The Consequential Amendments Bill

The Consequential Amendments Bill amends the following legislation to enable the disclosure of protected information to the FRAA:

• Australian Prudential Regulation Authority Act 1998 (Cth)

• Australian Securities and Investment Commission Act 2001 (Cth)

• Banking Act 1959 (Cth)

• Insurance Act 1973 (Cth)

• Life Insurance Act 1995 (Cth)

10 Concluding comments

The Bills propose to create the FRAA to give effect to the Government’s commitment to implement the recommendations in the Banking Royal Commission. From a policy implementation perspective, critics question whether the FRAA reflects the independent regulatory body envisioned by the Royal Commission, with consumer advocacy groups in Australia arguing that the essence of the Banking Royal Commission’s findings is to protect Australian consumers from misconduct in the financial services industry.

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Notes

[←1]

.    R Wiggins, T Piontek and A Metrick, ‘The Lehman Brothers bankruptcy A: overview’, Yale Program on Financial Stability Case Study, 2014-3A-V1, 1 October 2014, p. 2.

[←2]

.    The ‘Twin Peaks’ of financial regulation is actually a slight misnomer. This is because in addition to the twin regulators (ASIC and APRA), other agencies such as the Reserve Bank of Australia, the Treasury, and the Council of Financial Regulators also play a role in the regulation of Australia’s financial services industry.

[←3]

.    Australian Securities & Investments Commission (ASIC), ‘The ASIC – APRA relationship’, ASIC website, last updated 30 March 2021.

Please note regulation of consumer protection in the financial services industry was moved from the Australian Competition and Consumer Commission (ACCC) to ASIC in 2001. The Greens have proposed to ‘strip ASIC of its responsibility for overseeing consumer protection and competition within the essential services of basic banking, insurance and superannuation and return them to the ACCC.’

[←4]

.    Ibid.

[←5]

.    Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Banking Royal Commission), Final report, v. 1, Banking Royal Commission, Canberra, 2019, p. 1.

[←6]

.    Ibid.

[←7]

.    Banking Royal Commission, Interim report, v. 1, Banking Royal Commission, Canberra, 2018, p. xix.

[←8]

.    Ibid., p. 67.

[←9]

.    Banking Royal Commission, Final report, op. cit., pp. 20–42.

[←10]

.    ‘Quadrennial’ means happening every four years. A capability review of APRA was undertaken after the release of the Banking Royal Commission final report. The capability review was completed in July 2019.

[←11]

.    Banking Royal Commission, Final report, op. cit., p. 41.

[←12]

.    Ibid.

[←13]

.    Australian Government, Restoring trust in Australia’s financial system: the Government response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Department of the Treasury, Canberra, February, 2019.

[←14]

.    Ibid., p. 35.

[←15]

.    M Sukkar, ‘Second reading speech: Financial Regulator Assessment Authority Bill 2021’, House of Representatives, Debates, 13 May 2021, (proof), p. 4.

[←16]

.    P Pyburne, ‘Financial Sector Reform (Hayne Royal Commission Response No. 2) Bill 2020’, Bills digest, 46, 2020–21, Parliamentary Library, Canberra, 2021, p. 4.

[←17]

.    Explanatory Memorandum, Financial Regulator Assessment Authority Bill 2021, p. 6.

[←18]

.    Banking Royal Commission, Final report, op. cit., p. 473.

[←19]

.    Senate Standing Committee for the Scrutiny of Bills, Index of Bills considered by the Committee, 12 May 2021.

[←20]

.    Senate Standing Committee for the Selection of Bills, Report, 5, 2021, The Senate, Canberra, 13 May 2021.

[←21]

.    S Jones, ‘Second reading speech: Financial Regulator Assessment Authority Bill 2021, Financial Regulator Assessment Authority (Consequential Amendments and Transitional Provisions) Bill 2021’, House of Representatives, Debates, (proof), 26 May 2021, p. 19,

[←22]

.    Adam Bandt MP, the leader of the Greens, voted in the same fashion as ALP members in the House of Representatives when the Principal Bill was being debated. See Australia, House of Representatives, ‘Financial Regulator Assessment Authority Bill 2021’, Votes and proceedings, 118, 26 May 2021, p. 1882.

[←23]

.    N McKim, Government abandons Banking Royal Commission recommendations, media release, 19 January 2021.

[←24]

.    ASIC, ASIC update on implementation of Royal Commission recommendations, ASIC, Canberra, 19 February 2019, p. 4.

[←25]

.    H Rowell, Speech to the Australian Institute of Company Directors Breakfast, APRA, Canberra, 20 February 2020.

[←26]

.    Financial Rights Legal Centre, Choice and Consumer Action Law Centre (FRLC et al.), Joint submission on consultation for Exposure Draft re: Financial Regulator Assessment Authority Bill 2020, Marrickville, 28 February 2020, p. 1.

[←27]

.    Ibid.

[←28]

.    Ibid.

[←29]

.    Explanatory Memorandum, Financial Regulator Assessment Authority Bill 2021, p. 3.

[←30]

.    The Statement of Compatibility with Human Rights can be found at page 25 of the Explanatory Memorandum to the Bills.

[←31]

.    Parliamentary Joint Committee on Human Rights, Index of Bills considered by the Committee, updated 29 April 2021.

[←32]

.    Acts Interpretation Act 1901 (Cth), section 21(1)(b).

[←33]

.    Re Maritime Union of Australia (2003) 214 CLR 397, [2003] HCA 43 [15].

[←34]

.    Explanatory Memorandum, Financial Regulator Assessment Authority Bill 2021, p. 19.

[←35]

.    K Allen, ‘Second reading speech: Financial Regulator Assessment Authority Bill 2021, Financial Regulator Assessment Authority (Consequential Amendments and Transitional Provisions) Bill 2021’, House of Representatives, Debates, (proof), 26 May 2021, p. 25.

[←36]

.    Editorial, ‘Unedifying affair all round at ASIC’, The Australian Financial Review, 30 April 2021, p. 38.

[←37]

.    FRLC et al., Joint submission on consultation for Exposure Draft, op. cit., p. 3.

[←38]

.    Ibid.