4.3 Regulators and compliance

The recommendations seek to improve the effectiveness of the regulators in deterring misconduct and ensuring that there are just and appropriate consequences for misconduct.

Some recommendations seek to increase the ways in which the regulators can enforce the law by recommending that:

  • the BEAR be extended to other APRA-regulated institutions (Recommendations 3.9, 4.12 and 6.8);
  • APRA determine a new responsibility under the BEAR for bank products (Recommendation 1.17);
  • the breach of trustee and director covenants and obligations under the SIS Act should be subject to civil penalties (Recommendation 3.7); and
  • the ASIC Enforcement Review Taskforce recommendations be carried into effect (Recommendation 7.2).

Some recommendations relate to the governance and performance of APRA and ASIC. These include the recommendations about:

  • a new oversight authority (Recommendation 6.14);
  • both APRA and ASIC formulating and applying to their own management and accountability principles of the kind set out in the BEAR (Recommendation 6.12);
  • formalising ASIC’s meeting procedures (Recommendation 6.11); and
  • regular capability reviews of each of APRA and ASIC, including an immediate capability review of APRA (Recommendation 6.13).

Other recommendations re-adjust the roles of APRA and ASIC to reflect better the twin peaks model (Recommendation 6.1). They include recommendations about:

  • coregulation of superannuation (Recommendations 3.8, 6.3, 6.4 and 6.5);
  • joint administration of the BEAR in both its present form (Recommendations 6.6 and 6.7) and its extension to other APRAregulated institutions (Recommendations 3.9, 4.12 and 6.8); and
  • cooperation and information sharing between APRA and ASIC (Recommendations 6.9 and 6.10).

Some recommendations relate to ASIC’s operations, including:

  • ASIC’s approach to enforcement (Recommendation 6.2); and
  • the need for ASIC to undertake, or play a part in, reviews relating to the quality of advice by, and commissions paid to, financial advisers (Recommendations 2.3, 2.5 and 2.6).

Other recommendations seek to increase compliance with the law by:

  • establishing a new disciplinary system for financial advisers (Recommendation 2.10);
  • extending the sanctions power under the Life Insurance Code of Practice and the General Insurance Code of Practice (Recommendation 4.10); and
  • requiring cooperation with external dispute resolution processes (Recommendation 4.11).