The Australian Prudential Regulation Authority (APRA) updated the implementation date of the new cross-industry prudential standard CPS 230 on operational risk management and finalized the prudential standard CPS 900 on resolution planning, along with two prudential practice guides (CPG 190 and CPG 900) to improve recovery and resolution planning among APRA-regulated entities. Among other recent developments, APRA is seeking comments, June 23, 2023, on the review of authorized deposit-taking institutions' points of presence data collection and publication.
Below is a summary of the recent key developments:
- Prudential standard CPS 230 on operational risk management is designed to strengthen the management of operational risk in the banking, insurance and superannuation industries. Based on the consultation feedback, APRA intends to move the effective date for the new standard to July 01, 2025, and provide transitional arrangements for pre-existing contractual arrangements with service providers, with the requirements in the standard applying from the earlier of the next contract renewal date or July 01, 2026. In addition, APRA plans to release a final version of CPS 230, together with draft supporting guidance, in mid of 2023.
- The finalized prudential standard and the two prudential practice guides are aimed at strengthening the preparedness of banks, insurers, and superannuation funds to respond to a crisis. The prudential standard CPS 190 on recovery and exit planning ensures all APRA-regulated entities have recovery and exit plans for responding to severe financial stress, whereas the prudential standard CPS 900 on resolution planning ensures that large or complex APRA-regulated entities must support APRA in bespoke planning and pre-positioning to ensure that, in the event of failure, they can be resolved in an orderly manner.
- The consultation on points of presence data seeks feedback on how the data collection and publication can be made more helpful to users, examining issues such as categories of data published, and banking services covered. APRA publishes a detailed listing of the number of bank branches, and other physical banking points of presence, on an annual basis. APRA is reviewing its data collection and publication in response to Recommendation 7 of the Regional Banking Taskforce’s final report on the impact of bank branch closures in regional and remote Australia. The Taskforce recommended APRA review its points of presence collection to better capture indicators on how banking services are accessed, including through digital channels.
- Among additional updates, APRA updated its validation and derivation rules in Direct to APRA (D2A) to validate the data submitted by reporting entities, granted in1bank a license to operate as an authorized deposit-taking institution, and signed a memorandum of understanding (MoU) with the Australian Financial Complaints Authority (AFCA) to continue to work together to support a fair and efficient financial system.
Keywords: Asia Pacific, Australia, Banking, Operational Risk, Basel, Resolution Framework, Bank Licenses, CPS 230, CPS 190, CPS 900, Resolution Planning, CPG 190, CPG 900, Reporting, Validation Rules, Derivation Rules, D2A, AFCA, Nobleoak, APRA
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