APRA’s new boss defends conservative approach

APRA’s new chairman has dismissed claims that the regulator is out of step with the rest of the world on Basel standards.

In an opening statement to the House of Representatives Standing Committee on Economics on Friday, APRA chairman Wayne Byres said it is often said that APRA is ‘tough’, because it sometimes imposes requirements faster or stronger than the Basel standards.

“First, Basel standards are minimum requirements and it is quite common for jurisdictions to apply more stringent standards in some shape or form; and secondly, there are peer jurisdictions that have gone further and/or faster in implementing the reforms than APRA,” Mr Byres said.

“We would not want to be perceived in any way as a soft regulator, but the claim that APRA is way out in front of the rest of the world is, quite frankly, incorrect,” he said.

“The FSI report earlier this week also rejected that assertion, noting that it was not uncommon for countries with strong financial systems to adopt the Basel framework without extended transition periods and that ‘the weight of evidence suggests that having a more conservative approach … has not placed Australian banks at a significant competitive disadvantage.’

“Furthermore, it concluded ‘regulators have applied the framework in a manner and timeframe to best suit Australian market conditions’.”

Mr Byres wrapped up his speech by stating that the Australian economy is “generally in good shape”.

Of the 481 distinct entities under APRA supervision, only 11 are in the two highest categories or regulatory intervention or “the intensive care ward”, he said.

“These entities are being restored to health, or in some cases, making an orderly exit from the industry.”

Mr Byres reaffirmed that APRA is watching housing lending standards “with great interest”.

 

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