New regulators for financial system

The financial world is in for a shake-up on Wednesday, when the country’s three new financial regulators take control of the investment, banking and insurance system.

Previously regulated by four bodies, the Reserve Bank, the Financial Institutions Commission – which supervised state based credit unions, building societies and friendly societies, the Insurance and Superannuation Commission, and the Australian Securities Commission (ASC). The sector will now be regulated by three disparate bodies.

The Reserve Bank will continue to supervise monetary policy, the payments system and general system stability. A new body, the Australian Prudential Regulation Authority, will oversee deposit taking, life and general insurance and superannuation. The ASC will be expanded to become the Australian Securities and Investment Commission and will be in charge of consumer protection, market integrity and supervision of the corporations law.

These new bodies are a result of the recent Wallis inquiry into the financial system. Federal parliament approved the new system last week, with the opposition supporting the Government’s bill, reflecting widespread approval of the move.