In: Accounting
What are the three regulatory bodies in Australia’s financial system? What are their key responsibilities? What are the two main reasons for bank failure?
Three Regulatory Bodies in Australia's Financial System
Australia's financial regulatory framework – the main elements of which were introduced on 1 July 1998 in response to the recommendations of the Financial System Inquiry (the Wallis Committee) – consists of three agencies, each with specific functional responsibilities:
Responsibilities
The regulatory system in Australia does not aim to ensure financial institutions will never fail. To do so would require regulatory agencies to place severe limitations on risk-taking by regulated institutions and within the financial system. Instead, the CFR agencies' remits are focused on promoting effective governance of risk taking by institutions, measures to minimise adverse effects if an institution does become distressed, and ensuring investors and consumers remain informed. For example, APRA aims to minimise losses to beneficiaries and disruption to the broader financial system by managing an orderly exit of an unviable institution.