APRA to wield the stick in favour of dangling the carrot

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The Australian Prudential Regulation Authority will be reaching for the stick rather than the carrot as it adopts a newer tough approach.

Banks that don’t cooperate with APRA will be looking at public shaming, harsh capital penalties, operating restrictions and possible litigation.

APRA chairman Warren Byres spoke to the Australian Financial Review about the faster and more aggressive approach to be taken by the banking regulator.

“We should be quicker and more forceful with uncooperative institutions,” he said.

Financial risk will be targeted but so will behavioural risk and punishments will be dealt out to banks that don’t act with what APRA considers to be honesty and integrity.

To bolster their influence, APRA will look to work more closely with the Australian Securities and Investment Commission, with the aim of achieving that often repeated mantra of ‘collaboration’, allowing the two entities to share information.

APRA will also ask for more power from the Federal Government to expand its influence.

Mr Byres said court action would most likely remain a limited part of the deterrent mechanism.

“It’s all well and good to say we should have gone to court, but we always have to make decisions about the best use of our resources,” he said.

“There’s no suggestion in the report that major risks were left unaddressed for periods of time.”

“The first option is to get the problem fixed.”

“You can always look at instances and say, ‘I wish I had done something quicker when I look back with the benefit of hindsight’,” he told AFR.

“But I wouldn’t want to suggest that is because people were sitting on their hands.”

APRA maintains it will become deliberately strategic and more innovative in its enforcement.


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