Treasurer insists watchdog has enough cash

APRA chair Wayne Byres says it needs more funding if it is to meet community expectations.
APRA chair Wayne Byres says it needs more funding if it is to meet community expectations.

Treasurer Josh Frydenberg has rejected the financial watchdog's claims that it doesn't have enough money to do its job properly.

An independent review has found the Australian Prudential Regulation Authority was too secretive, unwilling to challenge itself and slow to respond to problems.

Staff anonymously criticised leadership for not forcefully taking on financial institutions and struggling with culture and governance.

APRA's chair Wayne Byres argued the organisation needed more funding if it was to meet community expectations.

But Mr Frydenberg says the federal government boosted the watchdog's funding by $200 million last year.

"What we'll do is always ensure the organisation is properly resourced, and we will consider in the next budget any other further requests," he told Seven's Sunrise program on Thursday.

"But APRA is moving from having just over 600 staff to over 700 staff this year, and we will ensure it's not only got the right legislative tools and the right penalties in place, but also the right resourcing."

Mr Frydenberg says he has spoken to Mr Byres, who assured him APRA was already dealing with changes.

The treasurer believes APRA needs to embrace technology such as cyber security, be more transparent with its meetings with banks, and focus on superannuation.

Retail and industry super advocates are at odds over calls to give the financial regulator powers to better police the performance of superannuation funds.

Industry Super Australia has welcomed the proposal, while the Association of Superannuation Funds of Australia says shifting the regulator's focus from long-term stability to short-term performance measures risks damage if not implemented "carefully".

Former consumer watchdog boss Graeme Samuel led the review after the regulator was slammed by the banking royal commission.

"APRA appears to have developed a culture that is unwilling to challenge itself, slow to respond and tentative in addressing issues that do not entail traditional financial risks," the report says.

"APRA needs to shift the dial towards a more strategic and forceful use of communication to ensure that it maximises its impact with regulated entities."

The report also says a division entirely focused on superannuation is needed, to oversee how the system performs for its members.

All of the report's 24 recommendations have been accepted, including 19 for the regulator and five directed towards government.

Recommendations for the government include reviewing the adequacy of APRA's penalties and giving it the power to appoint someone to undertake reviews.

Australian Associated Press