Treasury has released a discussion paper, prepared in conjunction with the Australian Prudential Regulation Authority (APRA), seeking submissions on the proposed financial institutions supervisory levies for the 2023-24 financial year.

The financial industry levies are set to recover the operational costs of APRA and other specific costs incurred by certain Commonwealth agencies, including Treasury and the Australian Taxation Office.

Except for private health insurers, the levy is structured as a percentage rate on assets.

Authorised deposit-taking institutions

In 2023-24, APRA’s supervisory activities in the ADI industry will focus on preserving trust in banks’ financial and operational resilience and embedding capital reforms for banks, to ensure Australia’s financial system remains safe and stable alongside the fundamentals of credit quality and liquidity. Focused APRA attention will be applied to: embedding the new capital framework; problem loan management; liquidity risk and the refinancing of the Term Funding Facility (TFF); assessing entity progress with governance, culture, remuneration and accountability (GCRA) remediation plans; resolution planning; developing enhanced crisis response plans for cyber risk to the payments system; and responding to innovations in financial products and services.

Life insurance/Friendly societies

In 2023-24, APRA’s supervisory activities in the life insurance and friendly society industry will remain focused on the establishment of a sound basis for long term product sustainability, ensuring good prudential outcomes for life insurers, and good long-term consumer outcomes.

General insurance

In 2023-24, APRA’s activities in the general insurance industry will aim to build resilience in the industry through improved risk management requirements across the sector, particularly as it faces challenges posed by natural disasters, rising reinsurance costs, heightened cyber operational risks, and an adverse economic environment.

In addition to the levy for general insurers, a separate levy to cover the costs of operating the National Claims and Policies Database (NCPD) will continue in 2023-24.

Superannuation

In 2023-24, APRA’s supervisory activities in the superannuation industry will continue to focus on holding trustees to account to improve the member outcomes they are delivering, and to actively address deficiencies in their practices ensuring all Australians are well served by the superannuation system.

Private health insurance

The PHI supervisory levy adopts a cost-of-supervision based rationale and is structured as a fee per policy holder.

In 2023-24, APRA’s supervision activities include enhancing preparedness for the new PHI capital framework and operational resilience around continuity planning for outsourced arrangements.

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