Insights / August 8th, 2019

APRA’s Capability Review

On 11 February 2019, the Government announced a Capability Review (Review) of APRA to be led by Chair Graeme Samuel AC, Dianne Smith-Gander OA and Grant Spencer.[1] The Capability Review Report (Report) was to provide an assessment of APRA’s ability to respond to an ever increasing complex environment and the emerging risks for the sectors it regulates consistent with recommendation 6.13 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Capability Review Report

The Report was released on 15 July 2019 and made 24 recommendations. Of the 24 recommendations APRA have welcomed 19 recommendations having already adopted some of the required changes in its Corporate Plan.[2] The remaining 5 recommendations will be addressed by the Government. APRA will require Government financial support to implement the recommendations which the Government will consider in its 2020-21 budget process.

APRA’s key commitments

The Report recognises that APRA is a high-quality prudential supervisor, successful in delivering on its core principles of regulating entities and providing for the longevity of a resilient financial system. Of concern was that APRA’s internal culture and approach to regulation as its tolerance for operating beyond quantifiable financial risk has been identified as low. These factors have limited APRA’s ability to deliver on the breadth of its mandate and adapt to new challenges.

In response, APRA are committed to:

  • Maintaining and building financial systems resilience;

  • Leadership and culture;

  • Strengthening capability;

  • Focus on strong outcomes in superannuation; and

  • Enhance its strategic communications.

In summarising APRA’s commitments, Chair Wayne Byres stated;

"APRA is committed to ensuring it is fit for the future and the Panel’s recommendations support this. APRA will continue to focus on its primary responsibility to protect the financial well-being of the Australian community as it implements the changes that have been recommended and those APRA already has underway."[3]

A copy of the Report can be accessed from the Government’s Treasury website.

[1]The Hon Josh Frydenberg MP, Treasurer of the Commonwealth of Australia, ‘Recommendation 6.13: Regular Capability Reviews’, Taking action on the Banking, Superannuation & Financial Services Royal Commission, (Media Release, 11 February 2019) <http://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/015-2019>.

[2]‘APRA welcome Capability Review report and outlines action plan’, APRA, (Media Release, 17 July 2019) <https://www.apra.gov.au/media-centre/media-releases/apra-welcomes-capability-review-report-and-outlines-action-plan>.

[3]‘APRA welcome Capability Review report and outlines action plan’, APRA, (Media Release, 17 July 2019) <https://www.apra.gov.au/media-centre/media-releases/apra-welcomes-capability-review-report-and-outlines-action-plan>.

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