Wayne Byres has warned the public not to lose sight of the many other critical issues facing the financial system
While much focus and attention has been on the royal commission’s examination of the banks’ past conduct, APRA’s chairman Wayne Byres has urged the public not to lose sight of the “many other issues that are critical” to establishing and maintaining the resilience of the Australian financial system.
As he’s said many times, building resilience when times are good is much easier than trying to restore it after a crash, which is why APRA’s initiatives to reinforce sound lending standards are a main plank of its ongoing strategy.
While the regulator’s interventions to moderate the volume of new lending with higher risk characteristics have been working as anticipated, more still needs to be done to ensure these policies are “truly embedded into ongoing practices”.
“We will inevitably need to continue to allocate significant resources to this issue in the year ahead, making sure the industry delivers on its commitment to do better in the future,” he told the House of Representatives Standing Committee on Economics on Wednesday (28 March).
Byres also spoke about the recent passage of the Financial Sector Legislation Amendment Bill 2017 which improves APRA's crisis management powers, better equipping the regulator to deal with the actual or imminent failure of a financial institution.
He refuted some people’s concerns that the bill might allow APRA to use depositors’ money to save a failing bank.
“There is no such power in the Bill. Indeed, APRA’s purpose under the Banking Act is to protect depositors, and the idea of ‘bailing in’ deposits would be anathema to that core purpose,” he said.
The third matter he addressed was cyber risk, which he said was a growing threat for Australian financial institutions that are among the top targets for criminals. APRA proposed a package of measures aimed at shoring up institutions’ abilities to repel and respond to these attacks.
But he said the financial institutions and APRA will need to place greater emphasis on, and devote more resources to, this risk in the future.
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