The Government’s approach to implementing the recommendations of the Hayne Royal Commission with respect to regulation risks diluting the ‘twin peaks’ model, according to the Association of Superannuation Funds of Australia (ASFA).
In a submission filed with Treasury, ASFA has pointed to the increasing involvement of the Australian Securities and Investments Commission (ASIC) in superannuation and warned of increasing regulatory costs without any subsequent efficiencies.
The ASFA has questioned whether the Government’s approach will have the effect of ending “Twin Peaks’ regulation by effectively collapsing it “into a ‘Double Peak’”.
The submission has recommended that the ‘twin peaks’ model be maintained by ensuring that legislative provision/obligation is characterised as being predominantly for prudential or consumer protection purposes.
It suggested that if both regulators were responsible for administering the law jointly, there might as well be just one financial services regulator.
What is more the ASFA is suggesting that the degree to which the Government is empowering both the Australian Prudential Regulation Authority (APRA) and ASIC and recommended the need for external oversight.
“The decisions regulators make with respect to regulated entities – for example to exercise their directions-making powers or issue a stop order – potentially have significant commercial, financial and reputational implications,” it said. “They increasingly are making delegated legislation, which imposes new legal obligations and compliance requirements on regulated entities.”
“Given this, it is imperative there is appropriate oversight over their decision-making processes, including whether there are any underlying systemic issues, as well as the making of delegated legislation.”