Banking associations support government directive placing economic growth at the centre of how Australia's financial regulators operate
The Australian Banking Association (ABA) and the Customer Owned Banking Association (COBA) have both welcomed new Statements of Expectations for the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC), which direct the two regulators to prioritise economic growth, proportionate regulation, and a reduction in unnecessary regulatory burden.
The ABA said the inclusion of growth mandates reflected a longstanding industry position.
"Banks welcome new measures that support productivity and growth across the Australian economy," said Simon Birmingham, chief executive of the Australian Banking Association. "Getting the balance right is crucial. Banks recognise the need to ensure these growth mandates are implemented in a way that maintains the strength and stability of Australia's financial system and protections for customers."
Birmingham (pictured right) noted that comparable mandates had been introduced in other markets, including the UK, and said their adoption in Australia would help keep the domestic banking sector internationally competitive while supporting local economic growth.
He added that proper accountability and scrutiny of how regulators act on the government's expectations would be essential, and welcomed the requirement for both APRA and ASIC to report publicly on their performance against those expectations.
Birmingham also flagged support for strengthened proportionality commitments for smaller and mid-sized banks, which he said would support competition and broaden customer choice without reducing protections.
"These new statements build on momentum from regulatory efficiency measures announced in the Budget and the Council of Financial Regulators' ongoing work on regulatory reform. Banks will continue to work with APRA, ASIC and the government to progress these initiatives."
COBA also expressed support for the updated statements, with particular emphasis on provisions relating to smaller institutions. The updated APRA expectations include maintaining a "proportionate banking regulatory framework that maintains depositor protection and financial stability, while minimising regulatory burden on smaller banks."
"We have consistently advocated for regulation that is proportionate and risk-based, so customer-owned banks can continue to deliver genuine customer choice and robust competition in banking," said Michael Lawrence (pictured right), chief executive of the Customer Owned Banking Association. "We welcome these updated expectations, which recognise the importance of a diverse banking sector in Australia.
"We welcome a tailored regulatory approach that recognises the distinct models and risk profiles of different banks. This will allow customer-owned banks to focus on what they do best – meeting the needs of their members and communities – while supporting greater competition and choice across the Australian banking sector.
"Customer-owned banks play an important role in delivering competition and choice for Australian consumers. Fit-for-purpose and proportionate regulatory settings will support customer-owned banks in their market-leading service to members and broader communities – and ultimately give Australians more choice."
COBA futher highlighted the commitment to publish key performance indicators showing how regulators are reducing undue burden on industry.
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