The former head of the consumer watchdog, Graeme Samuel, is to cast a critical eye over the Australian Prudential Regulation Authority, Treasurer Josh Frydenberg has announced.
The review of APRA was one of the recommendations of the royal commission into banking – probably be the first to be implemented, following publication of the final report on Monday.
APRA came in for plenty of criticism at the Hayne inquiry, with its chief Wayne Byers admitting the organisation was a toothless tiger in some respects. So weak was the financial regulator that it had not sought declarations against super fund executives for acting dishonestly or against the interests of members because it “can’t obtain a civil penalty” in those cases, Mr Byers admitted to the royal commission.
Commissioner Kenneth Hayne found that APRA and its fellow regulator, the Australian Securities and Investments Commission, were ineffective and favoured enforceable agreements with miscreant financial institutions rather than prosecuting them for breaking the law.
Mr Samuel, who headed the Australian Competition and Consumer Commission from 2003-2011, told The New Daily that his review would look at three areas: “What are APRA’s powers of investigation, what are its powers of enforcement and what is the culture in terms of using those powers.”
Mr Samuel said he did not yet know who else would be on the review panel or how long it would take. The results of the review will be crucial in reforming APRA in the wake of the banking inquiry.
But Mr Samuel was on the front foot early, saying the finance sector needed to act on Mr Hayne’s recommendations immediately.
“I don’t think the banks and other financial institutions can, or should, wait for government to be dealing with a number of these matters,” he said.
On Monday, Australian Banking Association chief Anna Bligh said the banks accepted full responsibility for misconduct revealed in the royal commission.
Mr Samuel told the ABC the community expected immediate action.
“All right: if you’ve got responsibility for it, deal with it now. Undertake immediately to the regulators, ASIC and APRA,” he said.
“Institute codes of practice, codes of conduct that implement many, if not all, of the recommendations – because these are common-sense recommendations.”
The banks, he said, had had ample opportunity to understand that they needed to change their behaviour.
“If they haven’t got the message, then … they’re either blind, deaf, dumb and stupid, frankly. They ought to have got the message a long time ago,” Mr Samuel said.
Mr Samuel developed a tough reputation during his leadership of the ACCC, taking legal action against packaging groups Amcor and Visy over cartel behaviour. His criminal pursuit of Visy chief Dick Pratt was dropped only a day before Mr Pratt died of cancer in 2009.
He also recently panned the Productivity Commission’s report into Australia’s privatised airports, saying its finding that airports were not abusing their monopoly power had ignored expert advice.