APRA to take four years to restore trust in financial sector
The Australian Prudential and Regulation Authority’s (APRA’s) plan to change and improve the financial sector’s governance, culture, remuneration, and accountability (GCRA) will take four years, according to its chair Wayne Byres.
In a speech at an Australian Banking Association event, APRA chair Byres said the agenda was ‘ambitious’ and the four components were inter-dependent of each other and weakness in one would undermine the other three.
“We don’t underestimate the challenge. And given the scale of the task, it won’t be done overnight,” he said.
“It is a four-year plan for APRA, and we’ll need every bit of that time to drive change and observe whether we’ve been successful.”
Byres pointed to the Royal Commission and its own Capability Review that both concluded that APRA needed to do more to broaden its focus in relation to GCRA through more robust standards and intensifying its scrutiny and challenge of financial institutions.
He said APRA intended on doing this by strengthening the prudential framework, sharpening its supervision of GCRA, and sharing insights and findings with industry and the broader community.
“The message from recent commissions, reviews and inquiries is clear: regulated institutions must lift standards of governance, improve their internal cultures, and embed systems and practices of remuneration and accountability that support the long-term interests of their full range of stakeholders,” he said.
“…It is an ambitious agenda, undoubtedly, but one we are committed to delivering on.”
Byres said its success would entail:
- Stronger governance frameworks and processes, providing robust oversight of organisational activities;
- Organisational cultures that acknowledge the need for risks (of all types) to be prudently managed, and to deliver outcomes that balance the interests of all stakeholders;
- Remuneration arrangements that reflect a holistic assessment of performance and risk management; and
- Clear accountability (individually and collectively) for outcomes achieved.
“If we achieve these outcomes, APRA will have enhanced the financial resilience of regulated entities, reduced the likelihood of poor behaviour and misconduct, and helped to restore community trust and confidence in the Australian financial sector,” he said.
Recommended for you
Net cash flow on AMP’s platforms saw a substantial jump in the last quarter to $740 million, while its new digital advice offering boosted flows to superannuation and investment.
Insignia Financial has provided an update on the status of its private equity bidders as an initial six-week due diligence period comes to an end.
A judge has detailed how individuals lent as much as $1.1 million each to former financial adviser Anthony Del Vecchio, only learning when they contacted his employer that nothing had ever been invested.
Having rejected the possibility of an IPO, Mason Stevens’ CEO details why the wealth platform went down the PE route and how it intends to accelerate its growth ambitions in financial advice.
