The Royal Commission final report recommends the roles of ASIC and APRA be adjusted when it comes to superannuation oversight. A new independent body will also oversee the regulators.
Releasing his final report into Misconduct in the Banking, Superannuation and Financial Services Industry, Commissioner Kenneth Hayne recommended a new three-person oversight authority would assess the effectiveness of APRA and ASIC in meeting their statutory objects and discharging its functions, reporting to the Minister in respect of each regulator once every two years.
The report was also scathing in its assessment of the financial services regulators, with the Commissioner recommending regular capability reviews for both. Additionally, Hayne recommended the law be amended to oblige the regulators to co-operate with one another, and share information "to the maximum extent practicable."
The report also recommends the two regulators notify each other whenever they form the belief that a breach in respect the others enforcement responsibility has occurred.
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The report also noted ASIC should approach enforcement by starting with whether or not a court should determine the consequences of a contravention of the law. Hayne also said the corporate regulator should recognise infringement notices should most be used for administrative failing and will rarely be appropriate for provisions requiring an evaluative judgement.
For large corporations, Hayne said ASIC should recognise infringement notices will rarely be appropriate. Enforceable undertakings - which ASIC was criticised for using too much - were also in the commissioner's firing line, with Hayne recommending the corporate regulator recognise the relevance and importance of general and specific deterrence in deciding whether to accept an enforceable undertaking.
Additionally, Hayne called on ASIC to separate enforcement staff from non-enforcement related contact with regulated entities.
In responding to the report, APRA said it would take time to review the report's recommendations before issuing a more detailed response.
However, the prudential regulator said it was pleased many of the report's recommendations align with submissions it made to the Commission, including the preservation of the twin peaks regulatory architecture and a greater role for ASIC in the regulation of superannuation.
The Commissioner recommended APRA should be responsible for establishing and enforcing prudential standards within superannuation, with the regulator called on to ensure financial promises made by superannuation entities APRA supervises are met within a stable and efficient financial system.
In calling for an adjusted role for ASIC within superannuation, Hayne said the corporate regulator's responsibility is the relationship between RSE licensees and consumers, and added ASIC should be given power to enforce all provisions in the SIS Act which are or will become civil penalty provisions.