Bank victims pan reappointment of APRA boss
The federal government's decision to reappoint APRA chair Wayne Byres for another five-year term is stirring derision, scorn and consternation among members of financial services victims groups.
Treasurer Josh Frydenberg confirmed earlier this week that the government had anointed Byres for another stint running the regulator despite sharp questions raised in the Hayne Royal Commission's interim report about APRA's slack enforcement record.
Moreover, evidence presented to the royal commission's fifth round of hearings in August indicates that APRA dropped the ball on disciplining superannuation trustees for recurring breaches that affected thousands of retirement savers.
Even though the regulator knew that some superannuation providers were repeating the same breaches for more than two years, it never took legal action to curtail errant and non-compliant conduct.
High profile consumer campaigner Naomi Halpern, who was instrumental in securing parliamentary support for financial advice reforms in 2014, said victims were stunned by the government's decision to extend Byres' tenure given that the royal commission was still investigating the enforcement record of APRA.
"I think they should have waited until the royal commission submitted its findings and recommendations to government next year," she told Banking Day.
"His current term does not end until the middle of next year so why on earth is the government reappointing him for another term now?
"It doesn't make sense in light of the criticisms directed at APRA and other regulators in the commission's interim report."
Halpern fears that the reappointment is a first step in the federal government's plan to maintain a "business as usual" approach to financial regulation when the commission's work ends early next year.
Byres took the reins of the regulator in July 2014, which means some of the worst financial services scandals highlighted by the royal commission, occurred under his watch.
In the royal commission's interim report there are no references to any regulatory events that support APRA's claim that it takes action to protect the interests of the beneficiaries of superannuation funds.
Denise Brailey, founder of the Banking and Finance Consumers Support Association, also railed against Byres' reappointment.
"For more than a decade APRA has done very little to protect customers and failed to report misconduct to government," she said.
"Surely, the government could have waited until the royal commission's recommendations were released."
Macquarie University banking academic Pat McConnell said the reappointment looked "silly and unnecessary".
"Ostrich and sand is the analogy that jumps to mind," he said.
" I think it is deliberately pre-empting the process of the royal commission."
McConnell said he was concerned that APRA had not yet responded to criticism from the Productivity Commission about the way it managed the crackdown on interest-only lending by the banks.
In the middle of 2017 APRA introduced a requirement that banks limit interest-only mortgages to 30 per cent of new home lending.
However, the major banks exploited the APRA measure by raising rates for existing borrowers with interest-only loans.
APRA has never explained why it allowed the banks to reprice their interest only back books when these rate increases had no bearing on satisfying the new lending benchmark.
Earlier this year the Productivity Commission's final report into banking competition panned APRA for not taking steps to prevent the banks from repricing their back books.
"This behaviour should have been anticipated," the Productivity Commission concluded.
"The additional cost to the community was unnecessary."
The Productivity Commission noted that Australian borrowers would continue to wear the impact of the 2017 rate hikes because competitive pressure was not sufficient in local banking for downward repricing to occur as the limits were removed by APRA.