Chalmers gives financial regulators fresh marching orders

The nation’s two most important financial regulators will be told to give more weight to economic growth when policing banks and listed companies.

Treasurer Jim Chalmers this morning issued new, so-called statements of expectations for both the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission that set down how the government wants the agencies to exercise their powers.

Businesses and banks have complained for more than a decade that both agencies have ramped up red tape as governments of both political persuasions have sought to protect consumers from poor practices.

The Global Financial Crisis and the banking royal commission led to large increases in rules and regulations aimed at curbing the worst excesses of corporate leaders, while there have been ongoing concerns about environment regulation governing businesses.

Chalmers said the statements of expectations for both agencies would now contain a larger emphasis on promoting economic growth.

“This is all about enabling our financial regulators to unlock more productivity and more growth in our economy,” he said.

“These statements will ensure our financial regulators can help support productivity, unlock investment and grow our economy while preserving financial stability and market integrity and protecting consumers from harm.

“We’re striking the right balance between supporting productivity and investment, reducing the regulatory burden on businesses, promoting stability, and safeguarding our financial system and markets.”

Chalmers oversaw the last APRA statement of expectations which was updated in 2023.

It required the authority to promote financial safety, efficiency and competition in the sector while also ensuring the “flow finance to support strong, sustainable growth”.

The 2023 statement also sought to balance regulation in the superannuation sector with a goal of a “low incidence” of failure but not to go so far as to “guarantee a zero failure rate”.

The ASIC’s statement of expectations dates back to 2021 and then treasurer Josh Frydenberg.

It was heavily focused on supporting the nation’s economic recovery from the COVID-19 pandemic, but it also noted the corporation should “minimise the costs and burdens of regulatory requirements” on affected businesses and consumers.

Chalmers said the changed directions followed from the budget’s $10 billion productivity package and built on issues raised during last year’s economic reform roundtable.

In May, Chalmers unveiled a series of measures he said would slash regulatory costs and boost productivity. These included overhauling requirements for climate-related financial disclosures, changes to electronic record-keeping rules and increasing the cap on banks’ covered bond issuance.

The government estimates changes to regulations will save the financial sector $780 million a year.

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