The main elements of Australia's financial regulatory framework were introduced on 1 July 1998 in response to the recommendations of the Financial System Inquiry (the Wallis Committee). The financial system is overseen by the four CFR member agencies, each with specific responsibilities as set out in their statutory mandates:
- the Australian Prudential Regulation Authority (APRA), which has responsibility for prudential supervision of individual financial institutions;
- the Australian Securities and Investments Commission (ASIC), which has responsibility for market integrity and consumer protection across the financial system;
- the Reserve Bank of Australia (RBA), which has responsibility for monetary policy, overall financial system stability and regulation of the payments system; and
- the Australian Treasury, which has responsibility for advising the Government on financial stability issues and on the legislative and regulatory framework underpinning financial system infrastructure.
The regulatory system in Australia does not aim to ensure financial institutions will never fail. To do so would require regulatory agencies to place severe limitations on risk-taking by regulated institutions and within the financial system. Instead, the CFR agencies' remits are focused on promoting effective governance of risk taking by institutions, measures to minimise adverse effects if an institution does become distressed, and ensuring investors and consumers remain informed. For example, APRA aims to minimise losses to beneficiaries and disruption to the broader financial system by managing an orderly exit of an unviable institution.