Twin Peaks 2.0: Reforming Australia's Financial Regulatory Regime in Light of Failings Exposed by the Banking Royal Commission

Abstract

In November 2017 the Federal government established a Royal Commission in Australia’s financial services industry that has become widely known as the Banking Royal Commission. The Commission has, during its hearings and in its recent Interim Report, exposed serious misconduct and poor regulation in Australia’s financial services industry. The authors argue that the recommendation of the 2014 Financial System Inquiry that there be an Assessment Board to provide continuous oversight of the financial regulators, APRA and ASIC, is an effective solution to the regulatory failures exposed by the Banking Royal Commission. The benefits to Australia of the establishment of an Assessment Board are clear, and include enhanced accountability, improvements in the regulator’s culture, prevention of regulatory capture, and enhanced capacity to prevent financial crises. The introduction of an Assessment Board in Australia would serve as a timely and highly effective adjunct to the current Australian Twin Peaks financial regulatory architecture comprising APRA and ASIC.