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In Australia, regulators in the business sector are crucial in ensuring that the commercial market is functioning as it should. They enforce the law, keep companies accountable, and regulate the market to ensure everyone is playing by the rules. However, there are arguments for and against regulators. Some say an utterly unregulated market would be detrimental to society because the market will have no incentive to act in the public’s best interest. Others argue that a market free from regulation and regulators will allow the principles of supply and demand to compel businesses to act ethically, while maintaining affordable pricing. 

There are various regulators in Australia with specific statutory powers to regulate various facets of the market. This article will discuss the top five Australian business regulators you should know about, including: 

  • Australian Prudential Regulation Authority (APRA); 
  • Australian Securities and Investments Commission (ASIC);
  • The Australian Taxation Office (ATO); 
  • Australian Consumer and Competition Commission (ACCC); and
  • Reserve Bank of Australia (RBA).

1. Australian Prudential Regulation Authority

APRA regulates the Australian financial sector and the financial service companies to ensure the financial system remain stable and healthy. To do so, APRA monitors the financial sector’s competitiveness, profitability, risk exposure and compliance with the law and the expected ethical standards.  

APRA does a few things to ensure the financial system remain stable and healthy. APRA:

  • provides policy advice to the Federal Government on managing the financial system and limiting extremely high risk, unwise and fraudulent behaviours in the financial sector;
  • regulates the financial service companies to limit their risk exposure so that the health and stability of the whole financial system are not jeopardised if those risks are realised; and 
  • regulates and oversees the operation and management of banks, including regulating the licencing regime for banks. For instance, APRA can take control of a bank where APRA is reasonably satisfied the bank cannot manage its affairs. This power allows APRA to prevent banks from failing, which can be detrimental to consumers and the financial sector. To protect the consumers in the financial sector, APRA also guarantees up to $250,000 for each bank account in any bank. Therefore, if a bank fails, APRA will give each bank account holder up to $250,000 to offset the amount they lost in the bank account if certain conditions are met; and
  • it collects data to assess if the financial sector is complying with the law and the recommended practices. 

2. Australian Securities and Investments Commission

ASIC’s primary concern is protecting consumers and building confidence in the financial system. ASIC is more about threatening with sticks than inducing with carrots. For instance, after the Financial Services Royal Commission, ASIC gained much media attention for its active regulatory activities, including commencing proceedings against financial service companies and its ‘why not litigate’ slogan. 

ASIC’s Role

ASIC seeks to protect consumers and build confidence in the financial system in many ways, including by:

  • starting legal proceedings against any financial service companies who have breached the law. The fear of legal proceedings often deters financial service companies from acting outside the legal and ethical framework. It also keeps the actors in the financial system accountable and establishes case law on an area of the financial system that requires clarity;
  • providing guidelines on best practices and how the actors in the financial system should conduct themselves. An example is the regulatory guides that ASIC often releases. These guides explain how ASIC interprets a certain area of law, when ASIC is likely to take enforcement actions, and the principles underlying ASIC’s approach. 
  • managing and regulating the financial service companies through a licencing regime. Any company that wants to participate in the financial system must comply with ASIC’s rules and obtain any necessary licences. Further, an Australian Financial Services Licence is required to provide any form of financial service, and an Australian Credit Licence is needed to provide credit services. ASIC completes a thorough assessment of anyone who wants to provide financial and credit services to ensure they are adequately funded and have appropriate qualifications and a history of providing that service. Acting without the required licences is a breach of the law and may be subject to fines or more severe penalties; and
  • removing any unfair, unconscionable, or otherwise misleading and deceptive practices or conduct to the extent possible. 

3. Australian Taxation Office

The ATO is the ‘taxman’ and is responsible for collecting tax from Australians and Australian businesses. It also has oversight over the superannuation sector. To this extent, the ATO’s most crucial function is enforcing the relevant laws and regulations concerning taxation and superannuation. It also has associated functions like: 

  • providing and managing loans under the Higher Education Loan Program; 
  • providing payments to Australians and Australian businesses on behalf of the Government; and 
  • managing superannuation funds. 

The ATO adopts a self-assessment framework when assessing tax payable by taxpayers. Therefore, this means the ATO assumes that all information a business or person provides to the ATO at the time of the tax return is accurate.

However, the ATO may complete audits on any taxpayer to assess if the information provided by that taxpayer is accurate. If the information provided is inaccurate or the ATO finds tax avoidance activities, it may act against that taxpayer.  

4. Australian Competition and Consumer Commission

The ACCC is an independent Commonwealth statutory authority. Its role is to enforce the competition and consumer law in Australia and ensure the market is, to the extent possible, operating fairly for consumers. Additionally, the ACCC attempts to maintain a competitive market that facilitates economic growth and limits consumers from being exploited. To this extent, the ACCC investigates and acts against companies engaging in misleading and deceptive conduct, involved in price-fixing or cartel practices. In addition, it regulates mergers and acquisitions and prevents them to the extent they are not in the public’s interest. 

For example, the ACCC attempted to stop the merger of TPG and Vodafone because it believed that the merger could limit competition within the telecommunications sector. The courts ultimately permitted the merger to go ahead, but it shows that the ACCC does not shy away from standing against large corporations. 

The ACCC generally does not involve itself in individual consumer issues. Instead, it focuses on the market from a national and international perspective. The ACCC is an active regulator that takes proactive steps to ensure the market maintains the required standard. Further, the ACCC’s proactiveness is reflected in the fact that most Australian major law firms have a specialised legal team that focuses on competition and consumer law. 

5. Reserve Bank of Australia

While most people understand that RBA is a powerful government agency, a regulator and, most importantly, Australia’s central bank, many do not know what RBA does. As Australia’s central bank, an essential function of RBA is lending money to banks. In addition to this, RBA ensures the Australian financial system is stable. 

RBA’s idea of financial stability is a system that allows financial institutions and the market to adequately function, so that funds can flow smoothly between savers and investors. Indeed, RBA attempts to maintain stability through, among others:

  • maintaining the interest rate. This is perhaps the most famous function of RBA. RBA maintains the interest rate to maintain the inflation rate per year between 2% and 3%. This rate is considered to be good for sustainable economic growth;
  • regulating the payment systems. Payment systems facilitate the payments, including transfer by cash or electronic methods. In recent decades, there has been a significant surge in electronic payment systems. Therefore, RBA needs to adopt policies and grant permissions for any new payment systems to operate in Australia. Further, RBA’s job is to ensure that payment systems in Australia are efficient and meet Australians’ requirements;
  • monitoring the stability of the Australian currency; and
  • collecting and assessing the various types of economic and market data to determine the economy’s stability and growth.

Key Takeaways

Australia has many business regulators who act within a permitted legal framework to regulate the market. However, this article discussed the top five regulators, namely ASIC, APRA, ATO, ACCC and RBA.

To summarise, APRA regulates the financial system at a macro level to ensure the system is stable, healthy and operating within the expected ethical guidelines. On the other hand, ASIC regulates the financial system to protect consumers and ensure confidence in the financial system. The ATO manages the collection of tax and superannuation funds on behalf of the Federal Government. The ACCC regulates the market to maintain competitiveness and ensure consumers are protected from unfair practices. Finally, RBA oversees the Australian financial system to remain stable and efficient. 

If your business falls within the regulation of one of the regulators we discussed and you want to know more, LegalVision’s experienced regulatory and compliance lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions 

Who are the key Australian business regulators?

The top five Australian business regulators you should know about are the Australian Prudential Regulation Authority (APRA), Australian Securities and Investments Commission (ASIC), Australian Taxation Office (ATO), Australian Consumer and Competition Commission (ACCC) and Reserve Bank of Australia (RBA).

What is the role of APRA and ASIC?

ASIC and APRA both regulate the financial system. APRA regulates the financial system at a macro level, whereas ASIC regulates the financial system to protect consumers and ensure confidence in the financial system.


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