In response to questions at yesterday's Sustainable Governance Conference, Mr Charles Littrell, APRA's Executive General Manager, Policy, Research and Consulting, was quoted in today's Investor Daily as saying that Australia's retail investment industry is "based on bribery".

Mr. Littrell clarifies his remarks in relation to that article as follows:

1. The quotes in question were in the context of commission-based investment advisers who receive both monetary and non-monetary reward to place investors in specific products. In these cases, there can be a conflict of interest between the adviser and the investor, which needs to be managed carefully. Nothing in yesterday's remarks should be taken to imply that this activity is illegal.
   
2. There is no suggestion that the retail investment industry as a whole is unable to manage these issues appropriately.
   
3. Most fee and disclosure issues are matters for the Australian Securities and Investments Commission (ASIC). APRA's prudential concern with commission-based financial advice is that it might allow an overly-risky investment product to grow rapidly in the market, threatening the stability of the insurance company, superannuation fund or other regulated entity offering the product.

APRA is the prudential regulator of the financial services industry including banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. It currently regulates $1.5 trillion in assets for 20 million Australians.