The chairman of the Australian Prudential Regulation Authority (APRA), Wayne Byres, has made a strong case for the financial services industry not to walk away from the concept of self-regulation.
In an address to a Sydney conference, Byres said that while the Royal Commission had supported stronger powers for both APRA and the Australian Securities and Investments Commission (ASIC), the regulatory framework was rightly founded on boards and executives ultimately being responsible for the activities and performance of their companies.
“While after-the-event punishment will act as a general deterrent against illegal behaviour, more than just compliance with the law is needed to restore the financial sector’s reputation,” the APRA chairman said. “Individuals, companies and industries must better regulate their own behaviour: to do not only what is legal, but also have regard to what is right.”
“The optimal model of financial regulation – lowest cost, best outcomes – therefore requires self-regulation to play its part,” Byres said.
He said that underpinned by society’s value and norms, there would always need to be a layer of formal regulation established by Government in the public interest, but that it could be both much reduced, and at the same time made much more effective, when it was reinforced by three layers of robust self-regulation: “at the industry level, at the company level, and at the level of the individual”.