The 4-page Memorandum of Understanding (MoU) the between the Australian Securities and Investments Commission (ASIC) and the Australian Regulation Authority (APRA) publicly announced last week meets recommendations 6.9 and 6.10 from the Royal Commission’s final report.
This MoU replaces one signed between the two agencies back in 2010, which in turn replaced the MoU signed in 2004.
In a statement from APRA, the prudential regulator noted that the MoU reinforces the ‘twin peak‘ regulatory model between the two regulators.
In response to the announcement, the Government noted that, “The Government is preparing exposure draft legislation to give effect to Recommendation 6.9, which will create a statutory obligation on each of ASIC and APRA to cooperate, share information, and notify each other of suspected breaches of laws administered by the other. This MoU will support the implementation of that recommendation.”
APRA Chair Wayne Byres said that, “Strengthening engagement is a key priority of the ASIC Commissioners and APRA Members. We will continue to work closely together to enhance regulatory outcomes and achieve our respective mandates.”
ASIC Chair James Shipton responded with, “The MoU facilitates more timely supervision, investigations and enforcement action and deeper cooperation on policy matters and internal capabilities.”
The MOU highlights what is referred to as four key areas of ‘particular importance where interests align’:
prudential matters identified by APRA may affect an entity’s ability to meet its obligations to consumers;
conduct, investor protection or market integrity issues identified by ASIC could have a prudential impact on entities regulated by APRA, based on their size or complexity;
a course of conduct or systemic practices, taken together, may indicate prudential risk; and
policy or regulatory changes may have an impact on both APRA and ASIC’s responsibilities.
A report will be produced annually on the entities’ engagement activities and the effectiveness will be assessed biannually.