The government has released new draft legislation proposing extended powers for the Australian Prudential Regulation Authority
(APRA) into the non-bank sector.
The new measures, which were first announced in this year’s Budget
, have been elaborated on in a joint press release from Treasurer Scott Morrison
and the Minister for Revenue and Financial Services Kelly O’Dwyer.
The legislation proposes that APRA be allowed to “issue rules relating to lending practices” to non-bank lenders to combat any perceived financial stability risk.
These rules may target all non-bank lenders, a specific class of non-bank lender, or individual non-bank lenders and may impose different rules to different lenders under different circumstances.
Prior to making, varying or revoking a rule, APRA has been ordered to consult with the Australian Securities & Investments Commission (ASIC).
APRA will also be able to give directions to non-bank lenders. These must be given in writing and can order the non-bank to:
- Comply with the whole or part of an APRA rule;
- Refrain from lending out money with or without security; or
- Refrain from carrying out activities that result in funding or originating loans
These new rules will be backed by “appropriate enforcement mechanisms” including APRA directives ordering compliance and appropriate penalties.
Under these new powers, APRA will also be able to collect more data from non-bank lenders to better tailor the use of these strengthened capabilities.
“These new powers will allow APRA to manage the financial stability risks posed by the activities of non-bank lenders, complementing APRA’s current powers over ADIs,” the joint release said.
“APRA will use its independent judgement to determine how and when to use this tool, in consultation with the Council of Financial Regulators.”
The exposure draft and related explanatory material is available on the Treasury website
. The public has been invited to give feedback with submissions closing on 14 August.
APRA’s non-bank oversight may curb mortgage risks
APRA caps undermining competition: COBA
Regulatory limits hitting home buyers hard