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.
Keywords: Asia Pacific, Australia, Banking, Insurance, Self Assessment, Capital Review, Superannuation, Financial Stability, APRA
Previous ArticlePRA Amends Rulebook and Capital+ and RFB Reporting Templates
APRA has concluded its review of the comprehensive plans of authorized deposit-taking institutions for the assessment and management of loans with repayment deferrals.
ESAs (EBA, EIOPA, and ESMA) published the first joint report that assesses risks in the financial sector since the outbreak of the COVID-19 pandemic.
BoE and HM Treasury confirmed that the COVID Corporate Financing Facility (CCFF) will close for new purchases of commercial paper, with effect from March 23, 2021.
ECB published a decision allowing the euro area banks under its direct supervision to exclude certain central bank exposures from the leverage ratio.
ESAs launched a survey seeking feedback on the presentational aspects of product templates under the Sustainable Finance Disclosure Regulation (SFDR or Regulation 2019/2088).
ECB published input of the European System of Central Banks (ESCB) into the EBA feasibility report on reducing the reporting burden for banks in EU.
EC adopted a decision determining, for a limited period of time, that the regulatory framework applicable to central counterparties, or CCPs, in the UK and Northern Ireland is equivalent to the requirements laid down in the European Market Infrastructure Regulation (EMIR or Regulation 648/2012).
EBA has decided to phase out the guidelines on legislative and non-legislative moratoria of loan repayments, in accordance with the earlier specified end of September deadline.
EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).
ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.