APRA to Recommence Policy Work, Licensing Activity

Source: Regulation Asia Editors, Regulation Asia 2020-08-11

APRA will recommence public consultations on high-priority prudential policy reforms, and begin accepting new licence applications in September.

APRA (Australian Prudential Regulation Authority) has announced it will recommence public consultations on select policy reforms and begin a phased resumption of the issuing of new licences.

In March, APRA announced the suspension of the majority of its planned policy and supervision initiatives in response to Covid-19. In April, the issuing of new licences was also suspended due to the significant challenges new entrants would have faced due to economic uncertainty.

While APRA believes it can restart both policy consultations and licensing activity, it does not intend to pursue the full policy agenda set out in January for the time being. “APRA therefore intends to narrow its policy activities in the remainder of this year to a small number of high-priority prudential policy reforms,” said APRA chair Wayne Byres.

In 2020, public consultation till recommence on policy reforms related to:

the cross-industry prudential standard for remuneration;
bank capital reforms incorporating APRA’s unquestionably strong framework, Basel III, and measures to improve transparency, comparability and flexibility;
insurance capital reforms to incorporate changes in the accounting framework (AASB 17); and
the prudential standard for insurance in superannuation, and updated guidance on the sole purpose test.

APRA will also restart consultation on a limited number of its data collections, including the recommencement of its Superannuation Data Transformation project.

The recommencement of assessing and issuing new banking, insurance and superannuation licences will occur in two phases, with phase one starting in September 2020 and phase two in March 2021.

New licences issued during phase one will be issued to applicants that are branches or subsidiaries of foreign entities with significant financial resources and a strong operational track record in a similar business.

APRA will also accept new licence applications from other entity from September 2020, but these will not be issued until after March 2021.

The pathways to an ADI licence are also under review, including the ‘Restricted ADI’ licensing framework launched in 2018, to incorporate experiences to date, while continuing to support competition in the sector, APRA said.

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APRA to Recommence Policy Work, Licensing Activity

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