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    APRA Publishes Annual Report Assessing Its Performance as A Regulator

    December 19, 2019

    APRA released its 2018-19 self-assessment report, which contains the assessment of APRA against the six key performance indicators set out within the Regulatory Performance Framework of the government. Although APRA considers that it has met all six key performance indicators set out in the framework, opportunities for improvement have been identified for three indicators. These three indicators involve communication with regulated entities, improvements in assessment of proposed policy changes, and streamlining of compliance and monitoring approaches.

    APRA conducted this self-assessment  against the Regulator Performance Framework of the government. The framework comprises six key performance indicators, also known as KPIs, that articulate the overarching expectations of regulator performance by the government, namely:

    • KPI 1: Regulators do not unnecessarily impede the efficient operation of regulated entities.
    • KPI 2: Communication with regulated entities is clear, targeted, and effective.
    • KPI 3: Actions undertaken by regulators are proportionate to the regulatory risk being managed.
    • KPI 4: Compliance and monitoring approaches are streamlined and coordinated.
    • KPI 5: Regulators are open and transparent in their dealings with regulated entities.
    • KPI 6: Regulators actively contribute to the continuous improvement of regulatory frameworks.

    In promoting financial stability in Australia, APRA continues to balance financial safety with efficiency, competition, contestability, and competitive neutrality in line with its statutory objectives. APRA achieved its target of 100% compliance with Office of Best Practice Regulation (OBPR) requirements for all changes to the prudential framework made across all regulated industries in 2018-19; this included the preparation of formal Regulatory Impact Statements (to assess the costs and benefits of proposed policy changes), where required. Despite being assessed as compliant by the OBPR, the 2019 biennial stakeholder survey indicated that only 31% (23% in 2017) of stakeholders consider that changes to APRA’s prudential framework sufficiently consider the costs of regulation imposed on industry. Although an improvement, this suggests there is significant opportunity for APRA to improve transparency on the assessment of costs (and benefits) for proposed policy changes, and better communicate this process with APRA’s stakeholders.

    Furthermore, a key objective (and related actions) included in APRA’s 2019-2023 Corporate Plan is to improve external engagement by expanding communications to promote better prudential outcomes and drive accountability, including demonstrating how APRA balances its objectives. This was reinforced by the Capability Review of APRA. Improving transparency on the assessment of costs and benefits for proposed policy changes (such as meeting OBPR requirements) will also be addressed. 

     

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    Keywords: Asia Pacific, Australia, Banking, Insurance, Self Assessment, Capital Review, Superannuation, Financial Stability, APRA

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