Speaking at the Financial Services Council Leaders Summit in Sydney yesterday, shadow treasurer Chris Bowen said Labor's proposed Royal Commission would be "a prudent and timely examination of our financial regulation architecture".
"I want the Royal Commission to recommend what is necessary to stop banking scandals, but also given our changing circumstances in Australia in recent years, that roles and accountabilities of our regulatory authorities remain transparent and continue to be properly understood and scrutinised," Mr Bowen said.
Mr Bowen said it had been more than 20 years since the Wallis Report made recommendations to APRA or ASIC.
Rising levels of household debt, the "ad hoc nature of the changes" in regulation, and the rise and implications of fintech were cited as reasons for reconsidering the regulation of financial systems.
APRA's responsibilities lay with prudential regulation, not macroeconomic stability, which it has increasingly had a role in due to rising debt in the household sector, Mr Bowen said.
The shadow treasurer voiced his concerns about the blurring of accountability between ASIC and APRA following the new powers given to APRA by the Banking Executive Accountability Regime (BEAR) of the Turnbull government.
"ASIC has typically led on these conduct issues, but since the budget, APRA’s responsibilities will now include undertaking similar roles," he said.
"I am not suggesting that more oversight of good conduct is not warranted, or that these new roles can’t complement ASICs current work. But a stocktake is warranted."
Fintech, while a "positive development" that "provides great opportunities", was something financial regulation architecture needed to consider thanks to its emerging role in shaping and assessing certain aspects of regulation, according to Mr Bowen.
In a Q&A session with Financial Services Council chief executive Sally Loane, Mr Bowen said the royal commission was "a serious opportunity to examine very complex matters and give a voice to people who were struggling" to have their voice heard and for the royal commissioners to "take a holistic view on the state of financial regulation in Australia".
Mr Bowen also said he wanted Australia's financial regulation to be one of the best in the world, and pointed towards Asian trading partners other than China such as Indonesia, which he said was set to be the fifth largest economy in the world overtaking the UK, Germany, Russia and France.
