Overzealous regulators are apparently making life difficult for business, according to Federal Treasurer Josh Frydenberg, and he expects them to follow the law.
Frydenberg addressed the AFR Banking and Wealth Summit – an audience where some criticism of regulators might be welcome – and he delivered remarks that were an unsubtle dressing down of regulators for going a bit hard.
“It is the Parliament who determines who and what should be regulated. It’s the role of regulators to deliver on that intent, not to supplement, circumvent or frustrate it,” the Treasurer said, immediately after noting that the Hayne Royal Commission proposal for an oversight body for regulators will come into being.
“In the context of the COVID recovery, it is critical that our regulators are conscious of the environment they are operating in and have the flexibility to respond in a way that simultaneously fulfills their mandate, enhances consumer outcomes and supports rather than hinders the recovery.”
The Federal Treasurer is no doubt responding in part to whining about the way in which regulators work that comes from one source and one source only: business leaders and business associations.
Regulators would not be calling themselves overzealous when they hang out with the Federal Treasurer to update him on their activity. They would also not necessarily be calling themselves overzealous when they front Senate estimates to account for the fact that they are doing their job.
Overzealous is a word that bobs up in conversations and is used by lobbyists, powerful business figures in companies and people within professional firms when they have their quiet fireside chats or phone calls with the Federal Treasurer, his staff or Federal Treasury about the ‘pain’ compliance is wreaking in the corporate space.
Conversations like this usually contain sentiments such as the notion that tough regulators are stifling innovation, inhibiting free business practices and forcing businesses to focus more on compliance rather than adding value to their owners.
Businesses that talk like this are telling the Treasurer that they cannot walk and chew gum at the same time when many of them are large enough to do their jobs properly.
Regulators are responding quite properly to the burner that has been lit by the media and the royal commission into financial services conduct for failing to do their jobs.
What is disappointing about the Federal Treasurer’s rhetoric is that it appears that somebody has convinced him that it is time to pretend certain things said in the Hayne Royal Commission’s reports do not exist.
That is the only really logical explanation for the Treasurer’s trotting out of populist anti-regulatory rhetoric over the past 48 hours and his fiddling with the notion of loosening the cuffs when it comes to responsible lending obligations.
Let’s revisit what Kenneth Hayne QC in his wisdom decided to set out in the interim report published in September 2018.
Hayne told the Australian community there were some problems with the regulatory apparatus when it came to dealing with the miscreants embedded within the bowels of banking and similar institutions.
“When misconduct was revealed, it either