APRA chairman John Laker has used the annual convention of mutual credit unions and building societies to warn against reduced lending standards and frequent lending policy exceptions.Laker spoke at the Abacus convention in Cairns on Monday, and the Australian Prudential Regulatory Authority released the speech yesterday.The APRA chief told the convention that the regulator "sees instances - fortunately, isolated instances - where credit standards have been compromised for the sake of growth."Presumably, Laker had small ADIs in mind, given the audience.Laker also said that APRA "sees examples where lending policy exceptions are substantial in number."He told the convention that mutuals needed "to be alert to any deterioration in credit standards in housing lending" and cited the upward drift in non-performing housing loan ratios and signs of emerging pressure on credit standards. Laker also admonished some in the sector for their lack of progress in establishing self-securitisation arrangements with the Reserve Bank of Australia.Since 2009, APRA has urged larger credit unions and building societies to take this step as part of their contingency planning.  Laker said: "Many have now done so, but, to be frank, we have also had some push-back. Some have argued that existing securitisation warehouse arrangements and/or other committed facilities are an acceptable alternative.  "We disagree.  Experience in 2008 was that such arrangements can be unreliable at the very time they are needed."It's not clear how many ADIs are in APRA's bad books on this score. Ratings of self-securitisations by Standard & Poor's include only one for a building society (Wide Bay Australia) and none for a credit union.