The Treasurer will have the power to request that the new Financial Regulatory Assessment Authority conduct assessments of APRA and ASIC on an ad hoc basis, in addition to the authority’s normal biennial reviews.

The power is spelled out in the Financial Regulatory Assessment Authority Bill 2021, which the government introduced in parliament yesterday.

The authority will provide the Treasurer with assessment reports every two years, which will be made public. The Treasurer may 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.