6.3 Co-operation

To give statutory force to the practical necessity of co-operation, a provision should be inserted into each of the ASIC Act and the Australian Prudential Regulation Authority Act 1998 (Cth) (the APRA Act) to the effect that, so far as is practicable, each regulator must[1] in performing its functions and exercising its powers inform and co-operate with any other financial regulator with regulatory responsibility for an affected entity.[2]

That provision should be coupled with a requirement that APRA and ASIC prepare and maintain a memorandum setting out how the agencies intend to comply with their statutory duty to co-operate, including how they will co-ordinate their approach in areas of joint responsibility.[3]

Both ASIC and APRA have various memoranda of understanding with each other and other regulators.[4] A joint memorandum was entered into between ASIC and APRA in May 2010 and supplemented by a joint protocol in June 2010. Neither document has since been updated. In the main, both documents use permissive or aspirational language. For example, each agency agrees to ‘endeavour to consult’ with the other about matters relevant to the other’s jurisdiction.[5] The revised memorandum, which will need to take account of any changes made to implement the recommendations of this Report, should – at least in respect of core obligations – avoid permissive language and instead commit to real obligations.

Because the memorandum will be central to the joint relationship, the regulators should be required to review the operation of the memorandum at least every two years.

Given the importance of the memoradum to the proper administration of the laws that govern large parts of the Australian financial system, the memorandum should be declared to be a legislative instrument and should be laid before each House of Parliament.[6]

APRA and ASIC should each be required to report on the operation of the memorandum and steps taken under it in their annual reports.

[1] Cf APRA Act s 10A.

[2] See, eg, Australian Crime Commission Act 2002 (Cth) (the ACC Act) s 17 and Financial Services and Markets Act 2000 (UK) c 8, s 3D.

[3] See, eg, Financial Services and Markets Act 2000 (UK) c 8, s 3E.

[4] Exhibit 5.298, Witness statement of Helen Rowell, 14 August 2018, Exhibit HR-1-12 [APRA.007.0005.0007]; Exhibit 5.318, Witness statement of Peter Kell, 13 August 2018, Exhibit PK-6 [ASIC.0800.0012.0146]. See also Exhibit 7.145, Witness statement of Wayne Byres, 27 November 2018, Exhibit WB-1-45 [APRA.0075.0001.0306].