Some lending lacked common sense: APRA

The banking regulator believes new standards are working after finding that competition among lenders was eroding previous prudential standards.

The banking regulator says some lending decisions were "lacking in common sense" before it imposed new standards on banks this year.

But Australian Prudential Regulation Australia chairman Wayne Byres denies the regulator acted too late, telling a Senate hearing there was a delicate balance.

"With the benefit of hindsight, obviously we wish we had got onto this a bit sooner but ... if we act too soon we get accused to being to interventionist in managing institutions," he said on Thursday.