ASIC, APRA negotiating new co-regulation pact
APRA and ASIC have begun talks aimed at finalising a fresh memorandum of understanding in the wake the findings and recommendations of the Hayne Royal Commission.An ASIC spokesperson confirmed to Banking Day this week that the two agencies hoped to have a new MOU in place before the end of the year to support co-regulation of the financial services sector.ASIC Commissioner Sean Hughes, who joined the regulator in December, is leading his agency's engagement in the negotiations.The new MOU will help to underpin a reconfiguration of the working arrangements between the two regulators as the functional distinctions between their respective roles has become less clear. In 2018 APRA acquired responsibilities as a conduct regulator after the Turnbull government decided it should supervise the Bank Executive Accountability Regime.Hayne recommended that the regulators share responsibilities for implementing the BEAR and that ASIC apply it to other holders of financial services licences.While the Hayne inquiry did not recommend sweeping change to financial regulation in Australia, it proposed that the two regulators should adopt new methods for "co-regulation" particularly in the area of superannuation.Hayne recommended that ASIC take over enforcement of civil penalty actions against superannuation funds and trustees after APRA's failure to take action against regulated entities that had repeatedly breached their legal obligations.The royal commissioner also highlighted the importance of the MOU because he viewed it as the document that would establish a framework for the two regulators to collaborate more effectively.Hayne directed that the MOU should be reviewed every two years and that each regulator should explain in their annual reports its impact on their co-regulatory activities and outcomes.The Morrison Government might loom as a potential obstacle for finalising the MOU before the end of the year because it has not yet implemented most of Hayne's recommendations around co-regulation that require amendments to the Banking Act.