Twin peaks after Hayne: tensions and trade-offs in regulatory architecture

Australia uses a Twin Peaks financial supervisory architecture, which comprises a prudential regulator and a market conduct regulator. The logic of Twin Peaks is that regulatory functions are allocated between agencies according to the objective, rather than the target. This article argues that there are three, rather than two, distinct underlying objectives for financial sector regulation. The third is consumer protection. Regulation would be strengthened by the establishment of a specialist regulatory agency with responsibility for consumer protection in the retail market for financial products and services. The article therefore parts company with the final report of the Hayne Royal Commission, which recommended that the basic Twin Peaks architecture be retained.