Federal Parliament has passed legislation to establish a new Financial Regulator Assessment Authority (FRAA), increasing oversight of Australia’s twin-peak regulators.

The authority, recommended by the Hayne royal commission, will regularly review and report on the effectiveness and capability of the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority.

Treasurer Josh Frydenberg says in its first year FRAA will be tasked with assessing the effectiveness and capability of ASIC, assisting new Chairman Joseph Longo in ensuring it is operating in line with expectations and is supporting the economic recovery from the COVID-19 pandemic.

Biennial reports will be tabled by the authority in Federal Parliament, adding to existing accountability processes.

The new regulator will consist of three independent statutory appointees, who will be named “in due course”.