The Australian Prudential Regulation Authority (APRA) has rejected the growing calls for financial deregulation which have gathered pace since Donald Trump was elected President of the United States.
Chair John Lonsdale said calls to rethink the impact of regulation on competition and efficiency had been boosted by a new U.S. administration with an agenda of cutting red tape, increasing trade barriers and reviewing multi-national frameworks.
Lonsdale said he did not detect a significant appetite among his overseas peers for a wholesale rollback of the regulatory settings that had helped protect global financial stability since the global financial crisis (GFC).
He said APRA strongly supported the work done internationally since 2008 to strengthen the resilience of the banking system and curb the high-risk behaviours that led to the GFC.
APRA was reluctant to lower the regulatory standards that kept Australia’s financial system resilient and economy strong, particularly when geopolitical risks were increasing.
“But that doesn’t mean we’re closed off to making our prudential framework simpler, less burdensome or more proportionate,” Lonsdale said in a speech to the Australian Financial Review banking summit.
“Unlike deregulation, which can mean lowering standards, this simplification means making regulation easier to understand and implement and less costly and burdensome to comply with.”
APRA’s prudential framework had a significant level of proportionality, with simpler requirements for smaller, less complex and less systemically important institutions and it was always looking to balance regulation benefits and costs and transparency.
“Mindful of community concerns about the level of competition in banking and insurance, we are actively exploring how we can make our framework even more proportionate without harming financial safety,” he said.
Lonsdale said the “geopolitical maelstrom” brewing overseas and being monitored by Australian business and political leaders was like waiting for a storm.
