Much has been made of the manner in which outgoing APRA chairman, John Laker, oversaw the recovery of the regulator in the aftermath of HIH but it would be wrong to forget that the Trio/Astarra collapse happened on his watch.
At the risk of raining on the rather generous departure parade which has been granted to the outgoing chairman of the Australian Prudential Regulation Authority (APRA), John Laker, it is worth saying just two, interlinked words -Trio/Astarra.
Because as much as all the media coverage attending Dr Laker’s departure from the chairmanship of Australia’s prudential regulator has been both favourable and generous, the fact remains that one of this nation’s worst financial services frauds occurred on his watch.
It is also worth noting that while his predecessors at the helm of the prudential regulator were made to virtually fall on their swords in the aftermath of the collapse of big insurer, HIH Limited, Laker seemed to escape similar robust scrutiny over how he and his colleagues managed to almost totally miss the criminality which led to the collapse of Trio/Astarra.
Perhaps, in the end, Laker and his lieutenants within APRA were the beneficiaries of the reality that the collapse of Trio/Astarra, while seriously damaging to scores of Australian investors, was not as publicly obvious and well-understood as the collapse of a general insurer such as HIH. If that is the case, then the departing APRA chairman should count his luck.
He ought also count himself lucky that the Government of the day was sufficiently distracted by its own political machinations as first Kevin Rudd was deposed as Prime Minister and then Julia Gillard found herself on the outer.
It must therefore seem somewhat perverse to those within the regulator who paid a high price for the collapse of HIH that the man who came to the chairmanship, thereafter, has walked away in seeming triumph notwithstanding having been at the helm during a similar corporate failure.
This is not to say that, the collapse of Trio/Astarra aside, APRA has not done some sterling work during Laker’s time in the chair. Indeed, the prudential regulator can certainly take some credit for ensuring the underlying strength of the banking and insurance sectors which saw them emerge virtually unscathed from the global financial crisis.
Laker and his team can also take some credit for overseeing the implementation of the new MySuper Regime and the key elements of SuperStream, albeit that this remains a work in progress.
Notwithstanding these achievements, there will be many in the financial services community who will still be wondering at some of the regulator’s more peculiar initiatives over the past seven years, including sponsoring research which some might have suggested had a distinct bias, and waving through superannuation fund advertising which many still suggest breached the sole purpose test.
There will also be those who wonder whether the regulator’s efforts to provide the superannuation industry with appropriate performance-related data was everything that had originally been hoped for. Some have suggested it is a role better left to the Australian Bureau of Statistics.
Laker who, for a number of years at the helm of APRA, was described as being Australia’s highest-paid public servant will actually be succeeded by a man regarded as a career public servant, former Reserve Bank staffer, Wayne Byres.
It remains to be seen whether Laker’s departure will give rise to any significant change in approach on the part of APRA. However, taken in combination with a tightening of the Budget purse-strings and the Financial Systems Inquiry, some sort of change seems inescapable.
In the meantime, we feel certain that John Laker will enjoy a comfortable retirement.