Council of Financial Regulators Annual Report – 2000 1. Council of Financial Regulators

The Council of Financial Regulators is the co-ordinating body for Australia's main financial regulatory agencies: the Reserve Bank of Australia (RBA), which chairs the Council; the Australian Prudential Regulation Authority (APRA); and the Australian Securities and Investments Commission (ASIC).

The Council's role is to contribute to the efficiency and effectiveness of financial regulation by providing a high-level forum for co-operation and collaboration among its members. It does so by operating as an informal body in which members are able to share information and views, discuss regulatory reforms or issues where responsibilities overlap and, if the need arises, co-ordinate responses to potential threats to financial stability. These arrangements provide a flexible, low-cost approach to co-ordination among the main financial system regulators. The Council is non-statutory and has no regulatory functions separate from those of its members.

Membership of the Council comprises two representatives – the chief executive and a senior representative – from each of the three regulatory agencies. The Chairman is the Governor of the RBA, and the RBA provides the Council Secretariat. The Council met for the first time in May 1998 and currently meets about once every quarter.^[1] The Council's charter and administrative arrangements are shown in the box below and in Appendix A.

Council Activities in 2000

The backdrop to the Council's activities in 2000 was the successful negotiation of the ‘Year 2000 problem’ by the Australian financial system and its continued strong condition over the course of the year. The transition to the Year 2000 had been an important test for the co-ordination role of the Council; once passed, the Council devoted most of its attention to issues of regulatory architecture, both domestic and global. Changes to Australia's financial regulatory structure, in response to the recommendations of the Financial System Inquiry (the Wallis Committee) have now been bedded down, although some further reforms are progressing under the Commonwealth Government's Corporate Law Economic Reform Program (CLERP). These reforms are outlined in Chapter 2.

Globally, the various initiatives underway to strengthen the international financial system continue to engage Council members. A major focus of these initiatives, under the aegis of the Financial Stability Forum, is the development and implementation of international standards and codes for sound financial systems, which are designed to enhance transparency and contribute to crisis prevention. The participation of Council members in this reform process, which the Council itself helps to co-ordinate, is covered in Chapter 3.

Appendices to the Report provide further background information on the Council, on the main types of financial institutions in Australia and recent developments in the regulation/supervision of the Australian financial system.

The Council wishes to acknowledge the valuable contribution made by Mr Alan Cameron, former ASIC Chairman, who left the Council during the past year.