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The Australian Experience

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1 (202) 473 4932. Brief Overview of Recent History ... History ... and visionary statements about making Australia a Financial Centre in the Asia Pacific Region ... – PowerPoint PPT presentation

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Title: The Australian Experience


1
The Australian Experience
  • Financial Market Convergence Implications for
    Regulators and Regulatory Structures
  • Regulatory and Supervisory Issues in Private
    Pensions and Life Insurance
  • Craig Thorburn
  • Cthorburn_at_worldbank.org
  • 1 (202) 473 4932

2
Brief Overview of Recent History
  • Regulatory Reform introduced after extensive
    inquiry
  • New Structure of Regulatory Bodies
  • New Structure within APRA
  • New Regulations and Supervisory Approaches

3
History
  • 1996 - New Government elected with policy for a
    Financial System Inquiry, and visionary
    statements about making Australia a Financial
    Centre in the Asia Pacific Region
  • March 1997 Wallis Inquiry reports

4
Functional versus Institutional Approaches
Banks and other deposit takers Life and non life Insurers Pension Schemes
Anti Competitive Behaviour
Market misconduct
Asymmetric information
Systemic instability
ASIC (and ACCC)
ASIC
APRA
RBA
Australian functional approach highlights
enormous need for communication and co-ordination
5
Organisational Change
  • July 1998 APRA formed, ASIC takes over market
    conduct
  • July 1999 APRA adds state based regulators
  • August 1999 APRAs new structure commences

6
A purpose oriented structure
  • No industry oriented divisions or staffing groups
  • Cross divisional teams seen as temporary and
    supplementary

7
Key Challenges
  • Relocation
  • Making the new structure work
  • Inventing common processes
  • Moving toward common legislation and prudential
    standards
  • Developing consistency of approach
  • our prime objective is to supervise similar
    risks in similar ways, regardless of where they
    occur as this will lead to a more competitively
    neutral system and therefore a more efficient one

8
Responding to the Expectation of Consolidated
Supervision
  • Widespread industry expectation that there would
    be capital relief has dissipated
  • Industry given a standard on supervision that did
    not lead to any material market change
  • ELE concept introduced (as a concession) but no
    relief there either

9
The Environment Changes
  • Responding to failures and losses in
    superannuation and non life insurance
  • the need for more effective supervision to meet
    community expectations

10
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