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APRA update on implementation of Royal Commission recommendations
Further to its statement of 4 February, the Australian Prudential Regulation Authority (APRA) is today providing the following update on its plans in relation to specific recommendations contained in the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The Royal Commission has recommended a strengthening of APRA’s prudential and supervisory framework in a number of areas. APRA is committed to implementing the recommendations expeditiously. There are 10 recommendations requiring APRA’s direct attention. Of the 10, it is expected that nine will be completed by the end of 2020; of those, four are expected to be completed in 2019. The attached table provides a short description of APRA’s response to each of the recommendations specifically assigned to it.
In its Corporate Plan, APRA has detailed its current strategic priorities and initiatives relevant to achieving its mandate for the 2018-2022 planning cycle. A number of the wider themes emerging from the Royal Commission’s Final Report – such as the need to broaden APRA’s supervisory focus, enhance inter-agency cooperation and collaboration, and improve performance measurement and accountability – align with APRA’s existing program of work,and hence are already in train.
As outlined in its statement of 4 February, APRA is also examining each of the 12 matters in relation to individual entities that have been referred to it by the Royal Commission. This work is already underway and APRA will continue to liaise with ASIC and other relevant agencies to address promptly the matters identified.
These cases are being examined in parallel with APRA’s broader Enforcement Review. As previously announced, APRA is reviewing its enforcement strategy with the assistance of an Independent Expert Panel. This review has a wide scope that includes consideration of when to hold individuals to account (including under the Banking Executive Accountability Regime (BEAR)), when it would be appropriate to take enforcement action to achieve general and specific deterrence in appropriate cases, and APRA’s governance and other arrangements in relation to enforcement decisions. The Report will be completed at the end of March 2019 and published shortly thereafter.
The Commission’s Final Report also contains many other recommendations relevant to APRA, such as an extension of the BEAR, a strengthening of trustee duties in superannuation and additional penalties in the Superannuation Industry (Supervision) Act 1993, which will require legislative change. APRA stands ready to work with the Treasury, ASIC and other stakeholders to ensure these matters can be progressed as quickly as possible.
The Royal Commission’s recommendations reinforce APRA’s core mandate as a prudential supervisor tasked to protect the safety and stability of the financial system for the benefit of the Australian community. To that end, APRA continues to highlight that the Australian financial system remains fundamentally sound, and APRA will continue to strive to preserve this while adopting the recommendations of the Royal Commission.
In its Corporate Plan, APRA has detailed its current strategic priorities and initiatives relevant to achieving its mandate for the 2018-2022 planning cycle. A number of the wider themes emerging from the Royal Commission’s Final Report – such as the need to broaden APRA’s supervisory focus, enhance inter-agency cooperation and collaboration, and improve performance measurement and accountability – align with APRA’s existing program of work,and hence are already in train.
As outlined in its statement of 4 February, APRA is also examining each of the 12 matters in relation to individual entities that have been referred to it by the Royal Commission. This work is already underway and APRA will continue to liaise with ASIC and other relevant agencies to address promptly the matters identified.
These cases are being examined in parallel with APRA’s broader Enforcement Review. As previously announced, APRA is reviewing its enforcement strategy with the assistance of an Independent Expert Panel. This review has a wide scope that includes consideration of when to hold individuals to account (including under the Banking Executive Accountability Regime (BEAR)), when it would be appropriate to take enforcement action to achieve general and specific deterrence in appropriate cases, and APRA’s governance and other arrangements in relation to enforcement decisions. The Report will be completed at the end of March 2019 and published shortly thereafter.
The Commission’s Final Report also contains many other recommendations relevant to APRA, such as an extension of the BEAR, a strengthening of trustee duties in superannuation and additional penalties in the Superannuation Industry (Supervision) Act 1993, which will require legislative change. APRA stands ready to work with the Treasury, ASIC and other stakeholders to ensure these matters can be progressed as quickly as possible.
The Royal Commission’s recommendations reinforce APRA’s core mandate as a prudential supervisor tasked to protect the safety and stability of the financial system for the benefit of the Australian community. To that end, APRA continues to highlight that the Australian financial system remains fundamentally sound, and APRA will continue to strive to preserve this while adopting the recommendations of the Royal Commission.
Next steps
APRA intends to incorporate further information about the activity and timeframes associated with implementing the recommendations in future public announcements detailing its supervision and policy work program. The first of these will be APRA’s Policy Agenda for 2019, which is scheduled to be published later this month.
The table with APRA's plans in relation to specific recommendations contained in the Final Report of the Royal Commission can be found here.
The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, mutuals, general insurance and reinsurance companies, life insurance, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding around $9 trillion in assets for Australian depositors, policyholders and superannuation fund members.