The Australian Prudential Regulation Authority (APRA) is being investigated – in a friendly way – by the International Monetary Fund (IMF) and the World Bank under their Financial Sector Assessment Program (FSAP).

Speaking at an Institute of Company Directors function in Sydney last week, APRA Chairman John Laker said the FSAP is a rigorous and comprehensive assessment by international experts of a country’s financial soundness, governance and regulatory infrastructure.

“Over recent months, a 14-strong team drawn from the IMF, overseas central banks, regulatory agencies and the private sector has been assessing Australia’s observance of various financial sector codes and standards.”

Dr Laker says as part of this, the FSAP team has been evaluating APRA’s supervision of the banking and insurance industries against international standards, and has been talking to a number of private sector representatives in the process.

“Although we much prefer to work behind the scenes, APRA is inevitably in the public eye and we welcome scrutiny of our performance,” he said.

While the review is ongoing, Dr Laker says the FSAP team “has been impressed by the strength of the Australian financial system and the quality of Australia’s supervisory arrangements”.