Inquiry into the Australian Prudential Regulation Authority

Media release: 4 September 2000

APRA TO BE QUESTIONED BY PARLIAMENTARY COMMITTEE

Next Monday (4 September 2000), the House Economics Committee will question the Australian Prudential Regulation Authority (APRA) over its handling of its regulatory and supervisory responsibilities of the financial sector. The hearing will be held in Parliament House in Canberra at 10.00am.

Committee Chairman, David Hawker MP, said 'This is the first appearance of APRA before the House Economics Committee. Supervision and regulation of the financial sector has not been the object of significant public accountability since mid 1998 (when implementation of the Wallis report transferred this supervisory role from the Reserve Bank of Australia to the new regulatory agency - APRA). APRA's appearance before the committee brings these matters clearly back into the public arena.'

'While most of the financial sector considers the transition to the new regulatory framework has been smooth with a number of modest achievements, there are some major problem areas. It is those problems which the committee will specifically be seeking answers on', said David Hawker.

Major issues likely to be canvassed at the hearing include:

• effectiveness of APRA's new administrative structure;
• impact of the loss of experienced staff on APRA's relationship with the superannuation and insurance industries;
• inequities in the administration and determination of levies (eg. small excluded superannuation funds paying 965% of full cost recovery on their levies in the 1998/99 financial year);
• APRA's relationship with the other financial regulators (ie. RBA, ASIC and ACCC);
• how flexible APRA actually is and needs to be in its regulatory role;
• the wisdom of APRA's approach in dealing with superannuation organisations by focusing on key risk areas of funds;
• the reform of prudential regulations for the general insurance industry especially the proposal to increase capital adequacy requirements for general insurers from $2 million to $5 million which could prompt a major restructure of the industry; and
• the development of prudential standards for conglomerate financial entities.

The Committee expects to release its first report on APRA's performance later this year.

Members of the public are welcome to attend the hearing.

Ends
4 September 2000

Further information:
David Hawker MP (Chairman) (02) 6277 4837 (Parliament House)
(03) 5572 1100 (Electorate)
Kevin Bodel (Inquiry Secretary) (02) 6277 4586
Email: EFPA.Reps@aph.gov.au

APRA inquiry website: http://www.aph.gov.au/house/committee/efpa/apra9899/index.htm

Public Hearing Program

Date: Monday 4 September 2000
Time: 10:00am to 1:00pm
Location: House of Representatives Committee Room 1R3
Parliament House
Canberra

Witnesses:
Mr Graeme Thompson, Chief Executive Officer
Mr Brian Gray, Executive General Manager, Policy Research and Consulting
Mr Tom Karp, Executive General Manager, Diversified Institutions Division
Mr Les Phelps, Executive General Manager, Specialised Institutions Division

Committee Membership 39th Parliament

Chairman: Mr David Hawker MP
Deputy Chairman: Ms Anna Burke MP
Members:
Mr Anthony Albanese MP
Ms Teresa Gambaro MP
Mrs Kay Hull MP
Mr Mark Latham MP
Ms Tanya Plibersek MP
Mr Christopher Pyne MP
Hon Alex Somlyay MP
Dr Andrew Southcott MP

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