Our latest insights

APRA's proposed changes to ADI liquidity and capital standards have sparked discussions across the banking sector. To encourage a resilient banking future, we put forward a submission to APRA last week in response to the changes.

In a complex operating environment, the Australian Prudential Regulation Authority (APRA) is encouraging regulated entities to prioritise quality data as a valuable asset. APRA's growing emphasis on data risk management, evident in regulatory guidance such as CPG 235, CPS 234, and CPS 230, underscores the vital role of quality data for entities under its regulation. Despite progress revealed in APRA's 100 Critical Risk Data Elements Pilot study, a significant gap persists between current and optimal data risk management practices, with potential consequences including reputational damage and financial loss.

Today, APRA shared a letter outlining their expectations regarding credit risk provisioning for ADIs. Its focus includes robust model risk management, ongoing sensitivity analysis to navigate economic fluctuations, and the development of systematic procedures for identifying and addressing sector-specific risks – particularly in the context of AASB 9 Financial Instruments.

The Financial Accountability Regime (FAR) Bill 2023 marks a pivotal transformation in financial sector oversight, affecting all APRA regulated financial entities in the banking, insurance and superannuation industries as well as their significant related entities. Jointly administered by ASIC and APRA, the FAR will replace the Banking Executive Accountability Regime (BEAR), aiming to improve risk and governance cultures by imposing a strengthened responsibility and accountability framework for those financial institutions.

APRA has released Findings from its CPS 511 pre-implementation review which covered a total of 39 entities, the majority of which were Significant Financial Institutions (SFIs).

APRA has released its Corporate Plan 2023-24 with a focus on resilience following the global banking upheaval earlier this year with the collapse of SVB and Credit Suisse takeover.

This week, the Australian Prudential Regulation Authority (APRA) finalised new requirements to Prudential Standard CPS 511 Remuneration, which will significantly impact authorised deposit-taking institutions (ADIs), insurers, and superannuation entities. This new standard requires APRA-regulated entities to publish details around their remuneration frameworks, design, governance, and outcomes. These changes come in an effort to create more transparency and improve risk management, in particular in the context of the poorly designed and executed remuneration frameworks exposed through the financial services Royal Commission.

APRA-regulated businesses operating in the banking, insurance, and superannuation industries will soon be faced with significant regulatory changes. APRA and the ASIC have commenced early consultation around the introduction of the Financial Accountability Regime, which aims to establish a strong accountability framework to enhance risk management and governance practices in the financial sector.

Authorised deposit-taking institutions (ADIs) and the broader banking sector have recently faced significant headwinds, as the sector navigates unprecedented change. How can you best navigate current challenges and leverage opportunities to find efficiencies as you step into the new financial year? Here, we outline eight key considerations you should address to ensure your business is set up for FY24.

Last week, APRA Deputy Chair John Lonsdale delivered a speech at the COBA CEO and Director Forum. Reflecting on the history of the mutual banking sector, Lonsdale highlighted APRA’s recent review of mutuals exiting the industry and their performance 12 months prior to their exit. It brought to the fore several issues that could lead to potential future mutual exits, such as poor performance on cost management, lending growth and profitability. APRA highlighted three core priorities to “support a strong, stable mutual sector”, being: • Cyber risk, including CPS 234 reviews • Risk culture • Contingency and continuity frameworks

APRA’s feedback focuses on ensuring recovery from high-impact cyber-attacks. Boards are encouraged to seek assurance on the entity’s likely ability to recover from a high-impact cyber-attack.

On Tuesday 23 November 2021, APRA released commentary following the conclusion of its pilot initiatives – the tri-partite audit and technology resilience data collection.