Economists call the problem “regulatory capture” and, as well as being under-resourced, it seems the financial sector’s main regulators, APRA and ASIC, may have fallen prey to it.
This is old school AFR from Alan Mitchell:
None of these problems are new. The failures of governments and regulators to protect the public from the behaviour of industry have been well documented. One of the most striking examples is the failure of governments to act on the health risks posed by asbestos, as described by the University of California’s Michelle White.
…The most effective protection from asbestos came from litigation, after the courts shifted responsibility for dangerous and defective products on to the producers. With a rising tide of scientific evidence against asbestos and the removal of artificial barriers to workers compensation claims for asbestos-related illness, the 1970s brought an explosion of law suits.