Australia's financial regulators admit they are not perfect but maintain they have done their jobs, following scathing criticism from the banking royal commission.
The Australian Prudential Regulation Authority and Australian Securities and Investments Commission are reviewing their approach after Kenneth Hayne QC's interim report slammed their lack of action over widespread misconduct in the financial services industry.
Asked what the regulators have been doing over the last decade, APRA deputy chairman John Lonsdale said, "We were doing our job."
He said APRA's focus as the prudential regulator was on good prudential outcomes, which had largely happened.
"What the royal commission I think has highlighted though are some very important points which show that we are not perfect," Mr Lonsdale told a business function in Melbourne on Thursday.
"Could we increase our appetite for taking more enforcement action to improve individual accountability, accountability of the entity or just for general deterrence? I think the answer to that is yes."
Mr Lonsdale said APRA was also considering whether misconduct should just be viewed as a risk, as had been its previous approach, or whether it goes to good prudential outcomes.
"I think APRA is going through an evolution, not a revolution," he said.
Mr Lonsdale said APRA was also re-examining cases raised during the royal commission where the evidence was new or contradicted what the regulator had been told, which may lead to formal enforcement action.
Mr Hayne was scathing of the regulators for letting much of the misconduct go unpunished and failing to mark and enforce the bounds of permissible behaviour.
He said ASIC rarely went to court to seek public denunciation of and punishment for misconduct, while APRA never did.
ASIC commissioner John Price said the criticism centred around its starting point for enforcement activity, which the interim report said should be "why not litigate".
"With the benefit of hindsight I think that's not an unreasonable position," Mr Price told the FINSIA function.
Mr Price said on average ASIC had taken one court action a week for the past decade and its work had led to $1.82 billion in remediation and compensation for consumers.
"But that's not to say we are perfect."
ASIC and APRA's chairmen and bank bosses will give evidence at the royal commission's final hearing, which begins on Monday.
Australian Associated Press
