Treasurer Heralds New Era for Financial System Regulation

The Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) commence operations today following the historic overhaul of the nation’s regulatory framework for the financial sector. The Treasurer, the Hon. Peter Costello, MP, launched the new financial system regulators in Sydney today, just two years after announcing the Financial System Inquiry which triggered the reforms.

The Treasurer highlighted the significance of the changes, stating "Today’s launch represents a landmark in the history of corporate and financial regulation in Australia. The financial sector reforms are proof of the high priority that this Government has given to ensure that Australia is prepared to take on the challenges of the global economy into the new millennium."

"Recent experience in world economies has demonstrated the importance of having a financial system that is sound, where transactions can be undertaken with confidence and where accurate information is available to the market."

The new regulatory framework will be able to anticipate and respond to innovation, and Mr Costello said, will permit market participants to adapt to challenges of the current and emerging corporate and financial environment, both domestically and internationally.

Under the new arrangements, ASIC will take on responsibility for market integrity and consumer protection across the financial system, including for investment, insurance and superannuation products. APRA will provide prudential regulation of superannuation, insurance and deposit-taking institutions. It is expected that building societies, credit unions and friendly societies will join the ASIC and APRA regulatory regime later this year pending the conclusion of negotiations with the States.

The changes, which begin today, represent the achievement of a reform process embarked upon in May 1996, with the Government’s decision to establish the Financial System Inquiry, chaired by Mr Stan Wallis.

These changes to the financial system regulatory arrangements will be further underpinned by the revamped legislative regime for managed investments, and the improved company law provisions contained in the Managed Investments Act 1988 an the Company Law Review Act 1988, which also commence operation today.

SYDNEY
1 July 1998

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Read the Treasurer’s speech: Address on the Launch of the New Corporate and Financial Regulatory Framework (1 July 1998).