APRA will be given new powers over the non-bank sector according to the budget. Currently non-banks are outside of APRA’s control and fall within ASIC’s remit. This is an important change.
Also we note that APRA will be encouraged to use geographic-based restrictions on the proivision of credit. This could for example be setting capital to different levels in different geographies, or setting different loan to income or loan growth levels.
Both these developments are significant!
Improving regulator tools to address housing risks
The Government is ensuring that the Australian Prudential Regulation Authority (APRA) is able to respond flexibly to financial and housing market developments that pose a risk to financial stability. This includes giving APRA new powers over the provision of credit by lenders that are outside the traditional banking sector.
The Government also recognises that housing pressures and risks may not be the same in markets across Australia. For this reason, the Government will make it clear that APRA has the ability to use geographically-based restrictions on the provision of credit where APRA considers it appropriate.
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