Australian Prudential Regulation Authority

The Australian Prudential Regulation Authority (APRA) is a statutory authority of the Australian Government and the prudential regulator of the Australian financial services industry. APRA was established on 1 July 1998 in response to the recommendations of the Wallis Inquiry. APRA's authority and scope is determined pursuant to the Australian Prudential Regulation Authority Act, 1998 (Cth).

Australian Prudential Regulation Authority
Statutory authority overview
Formed1 July 1998 (1998-07-01)
Preceding agencies
DissolvedAustralian Prudential Regulation Commission
JurisdictionCommonwealth of Australia
HeadquartersSydney, New South Wales
Employees586 (As of 2017-2018)[1]
Minister responsible
Statutory authority executives
  • Wayne Byres,
    Chairman
  • Helen Rowell, Deputy Chairman
  • John Lonsdale, Deputy Chairman
  • Geoff Summerhayes, Member
Key document
Websitewww.apra.gov.au

Regulatory scope

APRA oversees banks, credit unions, building societies, friendly societies, general insurance, health insurance, reinsurance, and life insurance companies, and most members of the superannuation industry. It ensures that these institutions keep their financial promises; that is, that they will remain financially sound and able to meet their obligations to depositors, fund members and policy holders. It was established on 1 July 1998. APRA is funded largely by the industries that it supervises. APRA currently supervises institutions holding A$5.4 trillion in assets for Australian depositors, policyholders and superannuation fund members.

The current chairman of APRA is Wayne Byres and the deputy chairman is Helen Rowell. Geoff Summerhayes is the third APRA member.

History

The Insurance and Superannuation Commission (ISC) was formally established on 23 November 1987, following the proclamation of the Insurance and Superannuation Commissioner Act 1987. The commission was based at the Australian Automobile Association Building, Canberra[Note 1] and also had offices in Melbourne and Sydney. The Insurance and Superannuation Commission was absorbed into the Australian Prudential Regulation Authority on 1 July 1998.

In June 1996, the Financial System Inquiry (known as the Wallis Inquiry) was established to examine the results of the deregulation of the Australian financial system, to examine the forces driving further change, particularly technological, and recommend changes to the regulatory system to ensure an "efficient, responsive, competitive and flexible financial system to underpin stronger economic performance, consistent with financial stability, prudence, integrity and fairness."[2]

At the time, the regulators of the Australian financial services industry were based on the institutions and not the regulatory function. APRA's predecessor regulators were the Insurance and Superannuation Commission, the Reserve Bank of Australia and the Australian Financial Institutions Commission (AFIC). The Wallis Inquiry recommended a new structure.[3]

The role of the Reserve Bank of Australia (RBA) was amended to deal with monetary policy and systemic stability with the Payments System Board considering payments systems regulation. The role of the Australian Prudential Regulation Commission (later to become APRA) was amended to deal with prudential regulation of authorised deposit-taking institutions (ADIs), life and general insurance, and superannuation including Industry superannuation. The Corporations and Financial Services Commission was renamed and its role expanded as the Australian Securities and Investments Commission (ASIC) to deal with market integrity, consumer protection and corporations.

APRA was established on 1 July 1998 under the Australian Prudential Regulation Authority Act 1998.

APRA became prominent in the collapse of HIH Insurance in 2001 and for its investigation into the National Australia Bank foreign currency deal scandal in 2004.

APRA took over the previous role of the Private Health Insurance Administration Council in July 2015.[4]

In 2018 Peter Harris, the chair of the Productivity Commission, was critical of the role of APRA in limiting price competition in banking.[5] Representatives of APRA appeared before the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry during 2018.[6]

In 2018 APRA created the restricted authorised deposit-taking institution (RADI)[7] licensing framework to encourage new entrants and competition to the existing banking system.[8]

Prudential Standards and Practice Guides

APRA establishes prudential standards that regulated institutions must comply with.[9] It also creates and maintains Prudential Practice Guides (PPGs) to provide guidance on APRA’s view of "sound practice" in particular areas for specific industries, as well as areas common to most APRA-regulated entities ("cross-industry guides"). PPGs frequently discuss statutory requirements from legislation, regulations or APRA’s prudential standards, but do not themselves create enforceable requirements.[10]

Common cross-industry standards and guides[11]
Area Standard Practice Guide
220 - Risk Management CPS 220 Risk Management CPG 220 Risk Management - Apr 2018
231 - Outsourcing CPS 231 Outsourcing CPG 231 Outsourcing - Oct 2006
232 - Business Continuity Management CPS 232 Business Continuity Management -
233 - Pandemic Planning - CPG 233 Pandemic Planning - May 2013
234 - Information Security CPS 234 Information Security CPG 234 Information Security - Jun 2019
235 - Managing Data Risk - CPG 235 Managing Data Risk - Sep 2013

See also

Notes
  1. 212 Northbourne Avenue

References
  1. "17/18 ANNUAL REPORT" (PDF). Australian Prudential Regulation Authority. 30 June 2018. Retrieved 12 June 2019.
  2. "Financial System Inquiry". Treasury.gov.au.
  3. Parliamentary Library Archived 11 September 2006 at the Wayback Machine
  4. ARPA (22 November 2017). "Opening statement to the House of Representatives Standing Committee on Economics". www.apra.gov.au. Retrieved 4 June 2018.
  5. Eyers, James (1 March 2018). "Productivity Commission and banks at loggerheads on competition". Financial Review. Australia. Retrieved 1 March 2018.
  6. Eyers, James (1 March 2018). "APRA boss Wayne Byres prepared to lift 10pc investor lending cap". Financial Review. Australia. Retrieved 1 March 2018.
  7. "APRA finalises new Restricted ADI licensing framework". APRA. Archived from the original on 9 May 2018. Retrieved 11 May 2018.
  8. "APRA consults on changes to authorising new entrants to banking industry". APRA. Archived from the original on 11 May 2018. Retrieved 11 May 2018.
  9. "What does APRA do? | APRA". www.apra.gov.au. Retrieved 14 December 2020.
  10. APRA. "PRUDENTIAL PRACTICE GUIDE PRUDENTIAL PRACTICE GUIDE - CPG 234 Information Security - June 2019" (PDF). apra.gov.au.
  11. "Prudential and Reporting Standards for Authorised deposit-taking institutions | APRA". www.apra.gov.au. Retrieved 14 December 2020.
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