APRA announced its intent to recommence public consultations on select policy reforms and to begin a phased resumption of the issuance of new licenses for banking, insurance, and superannuation entities. These initiatives were suspended in March and April due to the impact of COVID-19 pandemic. One key policy reform that will be recommenced in 2020 through the process of public consultation involves the capital reforms for banks, incorporating APRA’s unquestionably strong framework, Basel III, and measures to improve transparency, comparability, and flexibility. Additional reforms that are to be recommenced are the insurance capital reforms to incorporate changes in the accounting framework (AASB 17), the cross-industry prudential standard for remuneration, the prudential standard for insurance in superannuation, and the updated guidance on the sole purpose test.
Aligned with its policy agenda, APRA will also restart consultation on a limited number of its data collections, including the recommencement of its superannuation data Transformation project. The policy program for 2021 will be reviewed in light of the current environment and with a view to continuing to support the financial sector as it responds to the impact of COVID-19 pandemic. In recognition of the high degree of ongoing uncertainty, policy initiatives will be responsive to the industry capacity and government priorities.
The recommencement of the assessing and issuing of new banking, insurance, and superannuation licenses will occur in two phases, with phase one starting in September 2020 and phase two in March 2021. New licenses issued during phase one will be issued to applicants that are branches or subsidiaries of foreign entities with significant financial resources and a strong operational track record in a similar business. APRA will also accept new license applications from any entity from September 2020. From March 2021, APRA envisages new licenses may be issued to any entity that meets the relevant prudential requirements. APRA is also reviewing the pathways to an authorized deposit-taking institution license, including the restricted authorized deposit-taking institution licensing framework that was launched in 2018, to incorporate experiences to date, while continuing to support competition in the sector.
Keywords: Asia Pacific, Australia, Banking, Insurance, Pensions, Superannuation, COVID-19, Remuneration, AASB 17, Insurance Contracts, IFRS 17, Regulatory Capital, Basel, Bank Licenses, APRA
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