The Newly Founded Financial Regulator Assessment Authority to Scrutinize Australia’s Twin-Peaks Regulators

The Aussie parliament has passed the Financial Regulator Assessment Authority Bill 2021 on last Wednesday by both houses.

The legislation marks the establishment of the Financial Regulator Assessment Authority (FRAA), which is tasked to evaluate both ASIC and APRA's effectiveness and capability every two years.

The new regulator of regulators will receive $7.7 million over three years as part of the set-up and will consist of three appointed part-time members, including an independent chair. The Treasury secretary will also be part of the new authority as an ex-officio member.

The FRAA is tasked to take a closer look at ASIC as the corporate regulator looks to restructure following the departure of previous chair James Shipton in late April.

The reason why a new watchdog of regulators is established is because the Hayne royal commission found that ASIC and APRA's effectiveness in delivering on their mandates was not subject to consistent and independent expert review over time.

While both regulators were already subject to an array of external assessment, review and oversight mechanisms, greater expertise beyond the scrutiny of politicians was required to keep them accountable.