The building blocks of the financial system are a variety of financial institutions that in some way intermediate the flow of funds between borrowers and lenders.
The main types of financial institutions in Australia are Authorised Deposit-taking Institutions (ADIs), non-bank financial intermediaries, and insurers and funds managers. Supervision of these institutions differs by type:
- ADIs (banks, building societies and credit unions) are supervised by the Australian Prudential Regulation Authority (APRA).
- Non-bank financial intermediaries (money market corporations, finance companies and securitisers) are required to meet disclosure, licensing and conduct requirements set by the Australian Securities and Investments Commission (ASIC). While APRA does not prudentially regulate these entities, it has reserve powers to impose rules over non-ADI lenders that are judged to pose a material risk to financial stability.
- Insurers and funds managers are generally supervised by APRA, although ASIC supervises some entities (e.g. public unit trusts).
More details are available on the RBA website.