Featured Product

    APRA Reviews Repayment Deferral Plans, Identifies Best Practices

    September 22, 2020

    APRA has concluded its review of the comprehensive plans of authorized deposit-taking institutions for the assessment and management of loans with repayment deferrals. In a letter addressed to these institutions, APRA encourages these institutions to consider the "better practice(s)" identified during the review of submitted plans. The identified practices span areas such as governance and oversight, customer engagement and contact strategies, credit assessment processes, and credit management and resourcing.

    APRA acknowledges that preparation and submission of these plans represents a significant milestone in the transition of borrowers, who have been provided a repayment deferral, back to making repayments where possible. In the letter, authorized deposit-taking institutions are are encouraged to consider the following areas of better practice:

    • Governance and oversight. Better practice provided for regular operational reporting to senior management to enable timely escalation of issues that may require management attention and oversight of progress against the implementation of the plan by the Board/Board Committee.  
    • Customer engagement and contact strategies. Most plans appropriately allowed for sufficient time to contact customers and arrive at a credit decision prior to the expiry of the deferral. Better practice incorporated a series of contacts, using multiple contact media over an extended period of up to six weeks prior to deferral expiry. Additionally, most plans appropriately and definitively considered the treatment of loans for uncontactable customers. Where repayments are to be recommenced for these customers without contact, better practice involved close monitoring the performance of these loans and additional contact strategies where payments are subsequently missed.
    • Credit assessment processes. As expected, plans included clear and well-articulated credit assessment processes in circumstances where the borrower requires additional assistance in terms of restructuring loans, extending the deferral, or hardship/default. Better practice incorporated strong quality assurance processes and controls around customer conversations and credit assessment decisions to ensure consistency in customer outcomes were implemented. Better practice also included appropriate controls to detect system and process errors and ensure that borrowers receive assistance in a manner that is consistent with that which has been presented and offered to them by the institution.
    • Credit management and resourcing. While material additional resourcing has been committed by many institutions to implement their plan, this was frequently based on best estimates of volumes and time taken for calls, with scope for material variation to occur. Better practice plans incorporated strong operational reporting capability, with regular oversight by Executive Management, supported by contingency plans for identification, training, and allocation of additional resources at short notice, should the need arise. 

     

    Related Links

    Keywords: Asia Pacific, Australia, Banking, COVID-19, Governance, Payment Deferrals, Credit Risk, Basel, APRA

    Featured Experts
    Related Articles
    News

    EC Rule on Contractual Recognition of Write Down and Conversion Powers

    The European Commission (EC) published the Delegated Regulation 2021/1527 with regard to the regulatory technical standards for the contractual recognition of write down and conversion powers.

    September 17, 2021 WebPage Regulatory News
    News

    ECB to Consider Climate Risks When Reviewing Collateral Framework

    In a response to the questions posed by a member of the European Parliament, the President Christine Lagarde highlighted the commitment of the European Central Bank (ECB) to an ambitious climate-related action plan along with a roadmap, which was published in July 2021.

    September 17, 2021 WebPage Regulatory News
    News

    SRB Provides Update on Approach to Prior Permissions Regime

    The Single Resolution Board (SRB) published a Communication on the application of regulatory technical standard provisions on prior permission for reducing eligible liabilities instruments as of January 01, 2022.

    September 16, 2021 WebPage Regulatory News
    News

    APRA Issues Further Guidance on Application of Securitization Standard

    The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to provide guidance to authorized deposit-taking institutions on the interpretation of APS 120, the prudential standard on securitization.

    September 16, 2021 WebPage Regulatory News
    News

    ACPR Publishes Corrective Version of RUBA Taxonomy

    The French Prudential Control and Resolution Authority (ACPR) published the corrective version of the RUBA taxonomy Version 1.0.1, which will come into force from the decree of January 31, 2022.

    September 15, 2021 WebPage Regulatory News
    News

    Nordea Bank and EIB Sign Agreement to Fund Green Projects in Nordics

    The European Commission (EC) announced that Nordea Bank has signed a guarantee agreement with the European Investment Bank (EIB) Group to support the sustainable transformation of businesses in the Nordics.

    September 15, 2021 WebPage Regulatory News
    News

    APRA Publishes FAQs on Capital Treatment of Overseas Subsidiaries

    The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to clarify the regulatory capital treatment of investments in the overseas deposit-taking and insurance subsidiaries.

    September 15, 2021 WebPage Regulatory News
    News

    EBA Finalizes Guidance to Assess Breaches of Large Exposure Limits

    The European Banking Authority (EBA) published the final report on the guidelines specifying the criteria to assess the exceptional cases when institutions exceed the large exposure limits and the time and measures needed for institutions to return to compliance.

    September 15, 2021 WebPage Regulatory News
    News

    PRA Finalizes Changes to Consolidated Prudential Rules Under CRD5/CRR2

    The Prudential Regulation Authority (PRA) issued the policy statement PS20/21, which contains final rules for the application of existing consolidated prudential requirements to financial holding companies and mixed financial holding companies.

    September 15, 2021 WebPage Regulatory News
    News

    EBA Revises Guidelines on Stress Tests of Deposit Guarantee Schemes

    The European Banking Authority (EBA) revised the guidelines on stress tests to be conducted by the national deposit guarantee schemes under the Deposit Guarantee Schemes Directive (DGSD).

    September 15, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7483