The Australian Prudential Regulation Authority (APRA) has released the details of its future role and use of enforcement activities under a tough new enforcement regime.
APRA’s new Enforcement Approach follows the creation of the Banking Executive Accountability Regime (BEAR) and the outcomes of the Prudential Inquiry into the Commonwealth Bank of Australia and the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The new Approach is founded on the results of APRA’s Enforcement Review, conducted by its Deputy Chair, John Lonsdale (pictured).
The review made seven recommendations designed to help the Authority better leverage its enforcement powers to achieve sound prudential outcomes.
Mr Lonsdale said that while APRA had, on the whole, performed well in its primary role of protecting the soundness and stability of institutions, it could achieve better outcomes in the future by taking stronger action earlier where entities were not cooperative or open.
He said it should be more willing to set public examples.
“To remain effective, we must continue to evolve and improve, especially in response to the ways in which non-financial risks, such as culture, can impact on prudential outcomes,” Mr Lonsdale said.
Chair of APRA, Wayne Byres thanked Mr Lonsdale and the APRA Review team for their work saying enforcement activity was not a stand-alone function, but rather a set of tools APRA’s supervisors could use in the case of uncooperative institutions.
“However, formal enforcement is an important weapon in our armoury,” Mr Byres said.
“As our powers have recently been strengthened in a number of areas, the new Enforcement Approach will ensure we make use of those powers as the Parliament intended.
‘In future, APRA will be less patient with the time taken by uncooperative entities to remediate issues, more forceful in expressing specific expectations, and prepared to set examples using public enforcement to achieve general deterrence.”
Details of APRA’s Enforcement Approach can be accessed at this PS News link.
