Silo – What financial regulators are discussing
The Council of Financial Regulators (CFR) noted in its March Quarterly Statement that despite cost-of-living pressures, most Australian borrowers are managing and loan arrears remain low overall.
However, the CFR also pointed to growing complexity in climate and sustainability reporting, with financial firms navigating an evolving mix of standards and data requirements. This remains a work in progress across the sector. The CFR plans to report to Government by 1 July 2025 on recommendations.
At the AFR Banking Summit last month, APRA Chair, John Lonsdale, reinforced this direction, highlighting how risks such as climate change, once considered niche, are now central to the strategic agenda.
Mr Lonsdale also stressed that APRA would not support any rollback of the international regulatory reforms that followed the global financial crisis (GFC). Instead, he called for proportionate regulation that balances safety with innovation, noting APRA's support for a governance framework that reflects modern financial risk, including climate, cyber, and social licence.
Mr Lonsdale also noted that poor governance has been at the heart of every major financial failure. This is why APRA is currently reviewing its cross-industry governance standards, with a focus on ensuring directors are appropriately skilled, succession planning is fit for purpose, and boards are capable of managing today’s complex risk landscape. He stated: ‘Governance is integral to the safety and stability of the entities we regulate and the outcomes they deliver for the community.’
While these proposed changes are targeted at APRA-regulated entities, the broader message applies across the finance industry: strong, accountable governance is foundational to risk management and compliance – whether that’s cyber risks, climate transition risks, or evolving market models.
With AUSTRAC about to send a clear warning with its findings of the review, non-bank lenders, fintechs, and other financial firms who may not sit under the direct prudential perimeter, it is a reminder that the NBL sector is critical to Australia’s financial ecosystem and non-bank lenders must have good governance, risk management and compliance systems.
This week the RBA Governor, Michele Bullock, made her first public statement following the US tariffs, importantly saying: ‘Financial market and economic volatility can be expected as this process unfolds. But there are two points I want to make on this. First, we’re not currently seeing the same degree of impact as previous market events like in 2008 for example. And second, the Australian financial system is strong and well placed to absorb shocks from abroad.’
The RBA is closely monitoring financial market conditions here and overseas, carefully considering ‘several factors including the response of our trading partners, additional counter-responses from the US, the response of our exchange rate, and adjustments in other financial markets. A key focus for us is how all this uncertainty is affecting decisions made by households and businesses in Australia.’
This isn’t science fiction… it’s our operating environment. And like all good dystopian narratives, survival doesn’t go to the strongest, but those prepared and clever enough to adapt.