‘Failures and job losses’: ASIC eyes risk of company collapses if economy sours

Lonsdale on Friday said APRA’s core business was to worry about risks, and some of the key risks on its radar were a weakening in the economy, global fragility, geopolitical risks, and changes in the climate and technology. At the same time, Lonsdale stressed that Australia’s financial system was “very strong”.

In separate remarks to ASIC’s conference last week, Longo also underlined the risk that rising interest rates were forcing some consumers into hardship, and causing some people to turn to “fringe sources of credit”.

Banks have reported low bad debts in recent results, though business bankers have pointed to the construction sector as a key weak spot.

The Reserve Bank’s Statement on Monetary Policy on Friday said businesses’ demand for labour remained strong and the outlook for business investment remained positive. But it also noted some weak spots, including a rise in insolvencies in the construction sector, because higher building material costs had reduced cashflows of some builders.

After the recent cyberattacks on Optus and Medibank, Longo also pointed to cyber risks as a key concern.

“I think this is a near-term, readily foreseeable present risk,” Longo said. “It’s really up to each entity and business to get a grip on this subject.”

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.