The Australian Prudential Regulation Authority (APRA) has released its policy and supervision priorities for banks, insurers, superannuation trustees over the next 12 to 18 months.

APRA’s latest priorities feature a heightened emphasis on new and emerging financial risks, practices and business models that are testing traditional regulatory boundaries and supervisory practices.

In the banking sector APRA has noted that the financial services industry is rapidly evolving with new banking-like services, delivery mechanisms, products and participants (both regulated and unregulated) emerging as a result of digital innovation. Examples include crypto-currencies, Banking as a Service (BaaS), and non-bank payment providers. This evolution of banking services impacts the business models and the strategic priorities of incumbent banks, potentially creating new or additional prudential risks. Similarly, new participants may challenge established regulatory boundaries and frameworks, including mechanisms for consumer protection.

APRA says it will continue to work closely with Treasury and the Australian Securities and Investments Commission to implement the proposed Financial Accountability Regime, which expands Banking Executive Accountability Regime to insurance and superannuation.

APRA’s priorities across the industries it supervises include strengthening the resilience of regulated entities in the domains of cyber risk, risk culture and governance, remuneration and accountability, as well as enhancing recovery planning and the management of growing risks, such as climate risk.

In the area of supervision, APRA’s top priorities include:
• rectifying sub-standard industry practices in superannuation and eradicating unacceptable product performance;
• cyber risk preparedness and responsiveness across all industries that APRA regulates;
• a continuing focus on risk culture, including rolling out a risk culture survey to benchmark perceived risk behaviours and the effectiveness of risk structures within entities;
• upgrading contingency and continuity frameworks, particularly in the banking sector; and
• ensuring sound insurance principles are applied in the insurance industries, with a focus on availability, affordability and sustainability of insurance.

If you found this article helpful, then subscribe to our news emails to keep up to date and look at our video courses for in-depth training. Use the search box at the top right of this page or the categories list on the right hand side of this page to check for other articles on the same or related matters.