Regulators’ enforcement priorities include focus on harm to consumers

A trio of the nation’s top regulators has warned harm to consumers will be a priority of their agencies with the spotlight including banks and the transition to green energy.

ASIC chair Joe Longo, second from left, ACCC chair Gina Cass-Gottlieb and APRA chair John Lonsdale, right, at the ASIC annual forum.

A trio of the nation’s top regulators has warned harm to consumers will be a priority of their agencies with the spotlight including banks and the corporate transition to green energy.

Speaking at the Australian Securities and Investments Commission annual forum on Wednesday, the regulators said 2023 had proven to be frenetic but warned they would continue to push enforcement activity in the year ahead.

ASIC chair Joe Longo said the corporate regulator was focused on protecting vulnerable Australians, warning the recent action against Westpac did not mark the last intervention against companies failing consumers.

Mr Longo said the corporate Australia “should all expect there to be more enforcement in the next 12 to 18 months”, after ASIC targeted Westpac over its handling of hardship requests from customers.

Mr Longo said it was “simply unacceptable” that companies thought they could do business and provide services to the community in an unregulated way.

“As a society, a civil society, we value regulation, because it helps draw the guardrails around what’s acceptable and what isn’t,” he said. “The same people who are worried about regulation being in the way also want certainty, so the well run businesses want to know what’s reasonably expected of them by law and by regulation.”

The ASIC chair said he was open to a rollout of a regulatory grid model, similar to that used by the UK’s Financial Conduct Authority to co-ordinate activity across agencies.

Mr Longo said this could give the “regulated population” an understanding of what to plan and expect, noting there was a “conflation” of expectations around regulators and banks.

“One of the things that really strikes me about all of this is everyone’s expectations around everyone else keeps going up,” he said.

ASIC chair Joe Longo. Picture: Aaron Francis

The pow wow on Wednesday came as the latest in several meetings between the agencies.

ASIC, the Australian Competition and Consumer Commission and prudential regulator routinely meet along with members of Treasury and the Reserve Bank to discuss issues.

ACCC chair Gina Cass-Gottlieb said regulators had to juggle issues to prioritise “where harm was greatest”, noting pressures around cost of living and volatility in financial markets were creating pressure to act from within the community.

Ms Cass-Gottlieb said the uncertainty around the energy transition and digital transformation was leading to the public bearing the risk, which required the regulator to act.

APRA chair John Lonsdale said the country’s regulatory regime had kept the financial sector well capitalised and stable.

Mr Lonsdale, who is charged with overseeing the stability of the banking, insurance, and superannuation sector, said the collapse of Silicon Valley Bank and ructions around Credit Suisse had tested resilience.

He said the crises had highlighted the potential issues around liquidity risks and interest rate risks in the banking book, but the country’s financial institutions had withstood the knocks.

The APRA chair said the regulator was closely looking the use of hybrid instruments by banks and had put out proposals to make “ a great system … even better”. He said the performance test for superannuation providers had been “really important” as the sector moved to better cater for retired Australians.

“We’ve spent a lot of time in APRA really building an armour plated financial system,” he said.

Mr Lonsdale, who took on the top job at the prudential regulator last year, said the agency spent a considerable amount of time looking at “where we can be proportional” with rolling out new standards to companies.

This comes a week after APRA warned it would change liquidity standards and increase capital requirements for banks.

The move will require banks to hold more government bonds and value liquid assets at market value, leading lenders to reveal any unrealised losses.

The banking industry expects the changes will weigh heavily on smaller banks who hold considerable amounts of bank bills and debt securities and eligible liquid assets under current rules.

Mr Lonsdale said APRA didn’t act “without thinking about proportionality and cost”.

“You’ve got to have the right controls in place and we expect, you know whether you’re CBA or a credit union, to actually have basic standards in place, but we don’t do it in a bubble,” he said.

“You might not like sometimes what we do, but you know, we’re listening and we will make our decisions with full information.”