Australian Prudential Regulation Authority (APRA) Chairman Wayne Byres says more work is needed to ensure new financial crisis management tools are used effectively if triggered.

Legislation that passed Parliament last month gives stronger powers to the regulator if a financial group becomes distressed, particularly when there is broader risk to the system.

“Put simply, these powers give us enhanced tools to fulfil our key purpose in relation to banking and insurance: to protect bank depositors and insurance policyholders,” Mr Byres told a Senate Economics Legislation Committee hearing.

“The task ahead for APRA is to invest in the necessary preparation and planning to make sure the tools within the new legislation can be effectively used when needed.”

Mr Byres says members of the Council of Financial Regulators, including APRA, need to have “done the necessary homework” so they are prepared if an event arises.

“We hope that is neither an imminent nor common occurrence,” he said.

APRA’s own accountability measures take on added importance given the strengthening of its regulatory powers, while it faces additional external scrutiny, Mr Byres says.

The royal commission into financial services misconduct will likely examine aspects of the regulator’s activities, with APRA providing documents and information, as requested.

The International Monetary Fund (IMF) will also this year put Australia under the microscope via its regular Financial Sector Assessment Program.

Mr Byres says the program will examine vulnerabilities and oversight arrangements and provide a report card on Australia, and APRA in particular, against internationally accepted principles.

“As was the case previously, we expect the IMF to find things we could do better,” Mr Byres said.

“APRA is ready, along with other members of the regulatory community, to give the IMF our full co-operation and look forward to its feedback.”