Regulators admit mistakes, promise to get tough

APRA’s focus was on delivering “good prudential outcomes”, he said, “and we think that’s largely happened”.

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“What the royal commission I think has highlighted, though, are some very important points which show we are not perfect,” he said.

“There are a few issues in particular that I’ve flagged that we’ll be looking very closely at – one is enforcement.”

Mr Lonsdale said APRA would launch a review of its enforcement strategy in the first three months of 2019. He said APRA had acknowledged the need to consider a “stronger appetite for formal enforcement action”, including giving greater weight to its use as an industry-wide deterrent.

APRA also warned it would be re-examining cases of potential misconduct raised during the Hayne royal commission, in circumstances where evidence was either new or contradicted with what APRA had previously been told.

“That process will continue into 2019, and may well lead to formal enforcement action should we deem it warranted,” Mr Lonsdale said.

Despite the greater focus on enforcement, Mr Lonsdale said he believed APRA was going through an “evolution, not a revolution”.

Corporate regulator ASIC – which was described by Commissioner Hayne as weak, too close to the banks and reluctant to prosecute them – also said “we are not perfect”, but pointed to the regulator’s enforcement statistics showing it had taken, on average, one case to court each week for the past decade.

“We’ve very much had a focus on remediation and compensating consumers and over the past decade that has delivered $1.8 billion – that’s billion with a ‘b’ – in remediation outcomes,” he said.

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Mr Price said he believed Commissioner Hayne’s chief concern surrounding ASIC was to do with its “starting point” in enforcement activity – too often opting for alternatives such as education or negotiation instead of asking the question, “Why not litigate?”

“With the benefit of hindsight I think that’s not an unreasonable position,” Mr Price said.

ASIC was in the process of strengthening oversight by embedding its staff inside major financial institutions, Mr Price said, to more closely monitor their governance and legal compliance. He said ASIC would also increase its oversight of the superannuation sector.