The Australian banking watchdog yesterday promised more “naming and shaming” of companies it was acting against and that it would restructure itself by the end of the year after an independent report accused it of being too discreet and slow.
Wayne Byres, chairman of the Australian Prudential Regulatory Authority (APRA), which supervise banks, insurers and pension funds, told reporters on a conference call it would get tougher with the entities it oversees.
“We will be absolutely doing more to publish names of individual entities where we were taking material action against them,” Byres said.
But Byres also said APRA, which is government-funded but independent, needs more money to carry out its work.
He pledged to work with the government to decide how to implement all 19 recommendations in the review released on Tuesday.
The regulator will publish revised goals in August that adopt the report’s recommendations.
The review, ordered by the government following a misconduct inquiry into the finance sector, accused APRA of being unwilling to challenge itself, slow to respond and tentative in addressing issues outside of traditional financial risks.
APRA’s preference for working “behind the scenes” with the more than 500 companies it oversees limited its effectiveness, and the regulator needed to communicate about its work more publicly and forcefully, the report added.
The report also said APRA tended to seek endorsement of parties affected by its decisions, and noted that its staff had expressed discontent about cases of decisions being reversed after these were escalated within the regulator.
“When institutions are consistently able to get a different result by appealing to GM (general manager) levels and above, line supervisors become demoralised and institutions become emboldened to push the limits,” the report quoted an unnamed staff member as saying.
Byres, APRA chairman since 2014, said the regulator may have focused too much on consistency, which “may have played out in terms of slower responses”, but he said sentiments expressed by some staff in the report were not widely held.
Azib Khan, banking analyst at stockbroker Morgans Financial, said the regulator “doesn’t always have all the resources to think about or see everything, and so it’s important that they remain open to consultation with the industry.”
Byres said he couldn’t provide a sum for what the regulator needs but called it “not a trivial amount”.
“The government has told us we can put a submission in (and) we certainly intend to do so,” he said.
“We are quite lightly resourced, even with the resourcing that the government has announced,” he added, referring to the federal government’s A$150mn ($106mn) boost to APRA’s funding for the fiscal year that began July 1.
That is about 25% more than APRA’s funding for the year ended June 2018.
From now, he said, when it came to “naming and shaming, the general direction is to do more of that”.
He pointed to a July 11 announcement that APRA was making three of Australia’s biggest banks – Westpac Banking Corp, Australia and New Zealand Banking Group Ltd and National Australia Bank Ltd – increase their capital reserves due to concerns about non-financial risk management. “Those are the kinds of things you can expect to see going forward,” Byres added.