The chairman of the Australian Prudential Regulation Authority (APRA), John Laker has dismissed claims that corporate governance is an issue best handled by the Australian Securities and Investments Commission (ASIC) under the terms of the Corporations Act.
Addressing a Melbourne symposium this week, Mr Laker said he believed corporate governance was a key issue for APRA despite suggestions from some quarters that it was not an issue for a prudential regulator.
“This view is plainly wrong, and betrays a lack of understanding of the role and history of prudential regulation in this country,” he said.
Laker said that while the Corporations Act established general obligations on board directors and other officers to act with care and diligence and in good faith it was silent on the interests of depositors and policyholders.
“It is silent on a board’s responsibilities for risk management. It is silent on board composition and skills. It is silent on the internal audit function,” he said.
“On its own, the Act provides a starting point for a robust prudential framework for governance of financial institutions, but additional requirements are needed in the interests of APRA’s beneficiaries,” Laker said.
He said that APRA’s governance proposals had been criticised as introducing an extra layer of regulation but he did not believe this criticism was well-founded.
