The Australian Prudential Regulation Authority (Apra) has urged Asias legal community to broaden its compliance focus.
Accepting IFLRs Award for services to financial regulation at last weeks IFLR Asia Awards, the regulators chairman John Laker, said adherence to black letter rules and a narrow compliance focus were not enough to ensure prudent risk management.
Over the past six months, the world has been braced for a major aftershock from the global financial crisis, he said. Market sentiment remains fragile and will remain so until European governments are able to demonstrate tangible progress in dealing with their sovereign debt crisis.
One of the main lessons from the financial crisis was the importance of ensuring that robust regulation is reinforced by effective hands-on supervision, he said.
Australian banks had very little exposure directly to Europe or European banks. They are profitable, well-managed and well-capitalised but as substantial borrowers in global funding markets they would inevitably be affected by any return to the acute risk aversion that plagued those markets in late 2008, he said.
Neither Australias banks or Apra itself can afford any sign of complacency; hence Apra will be maintaining its current intensity of supervision of the Australian financial system for a time to come, he said.
We are a cautious and conservative supervisor and at this junction we see no reason to begin to return our troops to the barracks, he said.
To that end, the regulator would continue its policy focus on the Basel III capital and liquidity reforms. We will be releasing further details on these reforms over the coming months, he said.
Apra had worked hard to ensure Australia had a robust regulatory framework, to build a team of astute and confident supervisors willing to back their judgment and a supervisory approach that is forward-looking and risk-based, he said.
This award is testament to that hard work and to a team effort, he added.