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APRA to take on new responsibilities

by Eliot Hastie5 minute read

APRA is ready to take on new responsibilities and adopt a broader focus in their activities, according to an undelivered speech from APRA chairman Wayne Byres.

The prudential regulator has released the address that its chairman, Wayne Byres, was expected to deliver to the senate economics legislation committee last week. The hearing was cancelled, however, after Prime Minister Scott Morrison called the federal election for 18 May, thereby dissolving Parliament.

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In his prepared statement, Mr Byres would have told the committee where the $150 million from the 2019 budget was being spent as well as the additional $60 million as announced last year.

“Taken together, this additional funding will support an increase of roughly 100 additional permanent staff, a meaningful increase relative to our long-run operating level of around 600,” he wrote in his address.

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The money would upgrade the authority’s supervisory capabilities in three main ways, Mr Byres was expected to say.

First, by enhancing the supervisory framework and approach for governance culture and remuneration that apply to all APRA-regulated entities. Second, by extending the Banking Executive Accountability Regime (BEAR) to all regulated entities including insurers and super funds, and lastly by boosting the authority’s broader supervision.

“We will also be using our additional resources to implement our new enforcement approach, which we plan to make public later this month.

“Taking into account developments such as the BEAR regime, the royal commission, the learnings from the CBA inquiry – and the fact we have had new powers given to us – we plan to set out a new approach to enforcement that will see us utilising our enforcement tools more quickly in future, particularly for uncooperative institutions,” the APRA chair would have said.

My Byres’ address reiterated that the Australian financial system was fundamentally sound but it could not be taken for granted.

“Pursuing short-term financial gain at the expense of doing the right thing inevitably comes at a steep cost in reputational damage and lost revenue, and we have challenged the industry to show greater leadership in responding to concerns about products or services, rather than being dragged into action by regulators or governments,” he wrote.

In 2019, APRA would commence a major drive towards increased transparency in the superannuation industry as part of a push to lift standards, the address reveals.

Mr Byres would have also noted that the recent passage of the Treasury Laws Amendment would give APRA more powers to force trustees to lift their game.

“When last here, I described the bill as a ‘game changer’ for us, and we are preparing to use the powers that Parliament has granted us to increase the pressure on underperforming trustees to lift their game or exit the industry,” he was expected to say.

APRA is also reportedly working hard to enact all of the necessary policy changes off the back of the royal commission.

“With respect to the 10 recommendations which fall within APRA’s responsibilities, we released the first proposed policy changes – in relation to land valuations, particularly for agricultural land (Recommendation 1.12) – a couple of weeks ago. Other actions remain on track against the action plan for each recommendation that we published in the week after the final report was released,” the address reads.

The senate committee will not be sitting while the government is in caretaker mode and will resume after the federal election.

[Related: Hayne’s remuneration recommendations ‘contradictory’]

APRA to take on new responsibilities
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