APRA welcomed the results of the review of the capabilities of APRA by the Australian government and the opportunity this review presents to better position APRA for the future. APRA also published a response to the recommendations that resulted from this review. APRA supports all of the 19 recommendations in the report directed at APRA, with work already underway on many as part of the current Corporate Plan of APRA. The report, which was published by The Treasury, makes observations about the increasingly complex operating environment and the need for APRA to expand its focus and capabilities to enable it to meet its mandate in the future.
The report made 24 forward-looking recommendations that seek to ensure that APRA is best placed to deal with its future environment and the challenges which lie ahead. Of these, 19 recommendations were made to APRA and five recommendations reside with the Government. The report recognizes APRA as a high-quality prudential supervisor that has been successful in delivering on its core mandate, which is to ensure the financial safety of regulated entities and a sound and resilient financial system. The recommendations were based on topics including leadership, organizational design, non-retail credit risk capacity, macro-prudential policy, crisis management and resolution, digital disruption, and financial resilience. APRA had already identified and begun work on many of the changes needed to strengthen its capability in the areas identified in the review. In August 2018, APRA released a four-year strategic plan that identified many of these themes. In addition, the new enforcement approach of APRA came into effect in April 2019 and implementation has begun on actions to respond to the Hayne Royal Commission.
The report concluded that APRA must expand its capabilities in a number of areas while emphasizing that this should be done without jeopardizing its core capability in financial safety and financial stability. The report proposed a challenging and ambitious agenda that seeks to ensure that APRA can, in the future, continue to deliver effectively on its mandate. In some cases, the necessary steps are within the control of APRA to deliver. In others, APRA will require government support to effectively implement the recommendations through additional funding or legislative and/or policy changes, as acknowledged by the report. APRA noted the government indication that it will consider the need for any additional funding as part of the 2020-21 Budget process. The APRA response highlighted that, in line with the recommendations and with its own plans for change, APRA is committed to:
- Maintaining and build financial system resilience—APRA will retain its unwavering focus on financial safety and stability, while expanding its capability in other important areas.
- Strengthening leadership and culture—APRA is continuing to strengthen its own leadership capabilities and culture and will adjust its organizational structure to support flexible and effective modes of operating.
- Enhancing capability—APRA is strengthening both its resourcing and supervisory approach to make issues of governance, culture, remuneration, and accountability a much more prominent and central part of its supervisory framework.
- Strong outcomes focus in superannuation—Building on the recent legislative reforms, APRA will continue to embed its strengthened focus on member outcomes as the center piece of its supervisory approach in superannuation.
- Improving cyber and technology strategy—APRA has identified cyber and technology as priority areas for focus across all APRA-regulated industries and is developing a cyber and technology strategy that includes building strong allegiances with public and private sector experts.
- Strengthening crisis management and resolution—APRA is strengthening its resolution capability and crisis preparedness under the strategic initiatives of the 2018-2022 Corporate Plan. APRA will provide advice to the government by the end of 2019 on the status of this work and the additional resources needed to enable it to be advanced more quickly.
Related Link: Media Release and APRA Response
Keywords: Asia Pacific, Australia, Banking, Insurance, Superannuation, Pensions, Governance, Cyber Risk, Resolution Framework, Capability Review, APRA
Previous ArticleCFTC to Establish Climate-Related Market Risk Subcommittee
The Bank for International Settlements (BIS) published a paper that studies impact of fintech lending on credit access for small businesses in U.S.
The Prudential Regulation Authority (PRA) issued the policy statement PS8/22 to amend the Own Funds and Eligible Liabilities (CRR) Part of the PRA Rulebook and update the supervisory statement SS7/13 titled "Definition of capital (CRR firms).
The European Banking Authority (EBA) launched the EU-wide transparency exercise for 2022, with results of the exercise expected to be published at the beginning of December, along with the annual Risk Assessment Report.
The Single Resolution Board (SRB) welcomed the adoption of the review of the Capital Requirements Regulation, or CRR, also known as the "CRR quick-fix."
The European Commission (EC) recently adopted the Delegated Regulation 2022/1622, which sets out the regulatory technical standards to specify the countries that constitute advanced economies for the purpose of specifying risk-weights for the sensitivities to equity.
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.