A bill establishing the Financial Regulatory Assessment Authority passed the Parliament this week and work to set it up may start as early as next week.
The authority will provide the Treasurer with assessment reports every two years, which will be made public. The Treasurer may also request reports “on any matter relating to APRA or ASIC effectiveness and capability” on an ad hoc basis.
The authority will not have the power to direct the regulators to implement any recommendations it makes.
The bill also specifies that the new authority will not comment on specific cases of regulatory enforcement actions or decisions. This limitation is designed to safeguard the regulators’ independence.
The bill gives effect to a recommendation of the Hayne royal commission, which called for the creation of a body to assess the effectiveness and capability of APRA and ASIC.
Hayne said that APRA and ASIC already operate within complex accountability frameworks but their effectiveness in delivering on their mandates is not subject to consistent and independent expert review over time.
While both regulators are accountable to the parliament, Hayne said parliamentary committees lacked expertise in assessing the effectiveness of regulators.
The FRAA will be an independent statutory authority, with three part-time members and an ex-officio member from Treasury. The legislation takes effect from July 1 or the date of royal assent.