List of recommendations

Recommendation 1

4.7The committee recommends that the Australian Government amend the Australian Prudential Regulation Authority Act 1998 to establish a statutory duty for the Parliamentary Joint Committee on Corporations and Financial Services to undertake regular scrutiny and oversight of the Australian Prudential Regulation Authority, broadly equivalent to the duties set out for that committee in relation to the Australian Securities and Investments Commission set out in section 243 of the Australian Securities and Investments Commission Act 2001.

Recommendation 2

4.14The committee recommends that the Australian Government amend the Australian Prudential Regulation Authority Act 1998 objectives contained in section 8 to include the promotion of first home ownership as a subsidiary objective.

Recommendation 3

4.15The committee recommends that the Australian Prudential Regulation Authority Act 1998 be amended to include specific obligations that the Australian Prudential Regulation Authority must have regard to the impacts on first home buyers when setting prudential standards.

Recommendation 4

4.16The committee recommends that the Australian Government provide the Australian Prudential Regulation Authority with a new Statement of Expectations which would include a requirement to consider the long-term benefits of widespread home ownership – for financial, social and fiscal stability - when setting prudential standards.

Recommendation 5

4.25The committee recommends that the Australian Government, through its Statement of Expectations, require the Australian Prudential Regulation Authority to prepare prudential guidelines for a lower first home buyer serviceability buffer that can be adjusted responsively to the economic cycle and to support financial stability settings within APRA’s prudential standards.

The prudential guidelines would be a separate and disallowable legislative instrument; and

APRA would monitor and report on the serviceability buffer’s impact on first home ownership and financial stability annually.

Recommendation 6

4.33The committee recommends that the Australian Government, through its Statement of Expectations, require the Australian Prudential Regulation Authority to prepare prudential guidelines allowing Authorised Deposit-taking Institutions to have lower capital risk weightings for first home mortgages where a stronger degree of risk protection exists, within APRA’s prudential standards.

The prudential guidelines would be a separate and disallowable legislative instrument; and

APRA would monitor and report annually on the impact on first homeowners and financial stability of enhanced flexibility around capital risk weightings.

Recommendation 7

4.36The committee recommends that the Australian Government consults with Approved Deposit-taking Institutions about options for modernising the Banking Code of Practice to facilitate lending in co-ownership scenarios.