The so-called “twin peaks” regulatory concept of APRA and ASIC may be altered by the recommendations that will flow from the HIH Royal Commission. As the investigation digs ever deeper into last year’s collapse of the insurer and turns up increasing evidence of unusual arrangements, Canberra is expected to take notice of any recommendations to alter the regulatory mix.

Sean Hughes, ASIC’s Director of Financial Services Regulation, agreed at last week’s RIBA conference in Geelong that the ability of the two regulators to work as two separate entities may be questioned by royal commissioner Justice Neville Owen. APRA in particular is expected to get a bit of a roasting for its allegedly detached approach to HIH.

Mr Hughes acknowledged that the overlap of responsibilities between ASIC and APRA became clear when HIH collapsed. “While ASIC’s role with HIH is investigatory, APRA’s role was prudentially focussed.”

While he declined to be drawn by rumours that ACCC Commissioner Professor Allan Fels likes the concept of a three-cornered super-regulator, Mr Hughes said the report of the royal commission, which is due in June, “will be viewed with interest” by ASIC.

“Post-HIH [collapse], the Government initially stated that it would not be walking away from the Wallis regulatory structure,” he said.

Mr Hughes said the outcome will also be of global interest, because the “twin peaks” concept is “leading-edge, and many countries are watching with interest to see whether this regime delivers what is expected of it”.

The FSRA is also a global first, and Mr Hughes said many regulators – particularly in Asia – view the legislation as a favourable precedent. “This places a responsibility on ASIC to be ‘leading edge’ in regulation across all sectors, including the insurance industry,” he said. “We need to keep across industry issues and be in a position to appreciate and respond to industry concerns.”