Highlights from the Quarterly Meeting of the Council of Financial Regulators

The Council of Financial Regulators held its regular quarterly meeting on Friday, 27 November 2020. 

In a statement published last week, the Council noted that the policy responses to the pandemic have resulted in a very low rate of business insolvencies during 2020, despite difficult trading conditions, with an expected increase in insolvencies in 2021. The Council members discussed the Government’s measures to increase the capacity of insolvency practitioners to manage the rise in insolvencies.

The Council has been closely monitoring the progress of efforts to test the validity of pandemic exclusions in business interruption insurance policies.

The Council continues to pursue several work-streams on cybersecurity. Members endorsed a work plan that will focus on coordinating agency approaches on incident response, regulatory frameworks and testing. Council expects to release its pilot framework for a threat intelligence-based testing regime (CORIE) shortly. 

Council members also discussed: 

• The operational outages experienced by the ASX in recent weeks and members expressed concern about the potential impact of the outages on market functioning and investor confidence. ASIC and the Reserve Bank have been in close contact with ASX during this period and will also be closely involved in ASX’s review processes;

• The deferral of loan repayments offered by lenders and the critical transition to regular repayment schedules as deferrals come to an end, noting that the transition has progressed relatively smoothly, with most borrowers recommencing scheduled repayments; 

• Credit conditions: owner-occupier housing credit has continued to grow at a moderate pace, while demand for credit by investors remains subdued; the demand for credit by businesses also remains subdued, mainly reflecting caution and a reduced need for funding as a result of the various support measures;

• The on-going digital identity initiatives, including work underway by the Digital Transformation Agency (DTA) and the private sector through the Australian Payments Network. A Council subcommittee will engage with the DTA on these issues;

• Several current Australian Prudential Regulation Authority (APRA) policy initiatives, including proposed enhancements to the capital regime for authorised deposit-taking institutions (ADIs), a review of ADI licensing arrangements, and APRA’s proposed remuneration prudential standard; and 

• The Government’s Review of the Australian Payments System. 

Please click the following link to read the full statement by the Council of Financial Regulators – December 2020