APRA Capability Review - Terms of Reference
Under the APRA Act, APRA’s statutory mandate is, in performing and exercising its
functions and powers, to balance the objectives of financial safety and efficiency,
competition, contestability and competitive neutrality and, in balancing these objectives, to
promote financial system stability in Australia.
APRA also has industry specific statutory responsibilities under the relevant industry acts, to
protect the interests of bank depositors, insurance policyholders and superannuation fund
members, and to administer the financial claims scheme. This includes under the
Superannuation Industry (Supervision) Act APRA’s responsibility for ensuring RSE
licensees prudently manage their business operations consistent with their member best
interest obligations and the delivery of quality member outcomes.
The objectives of the APRA Capability Review are to:
1.
Assess APRA’s capability to deliver upon its statutory mandate under the APRA Act
and relevant industry acts.
2.
Undertake a forward-looking assessment of APRA’s ability to respond to an
environment of growing complexity and emerging risks for APRA’s regulated sectors.
3.
Identify recommendations to enhance APRA’s future capability, having regard to the
changing operating environment and any relevant organisational initiatives which are
already underway.
As part of its work the Panel should evaluate the extent to which the following factors
support APRA to deliver its statutory mandate:
–
well-considered and clear strategy that takes into account the future operating
environment, effectively cascaded throughout the organisation;
–
decision-making that balances financial safety and financial stability, and considerations
of efficiency, competition, contestability and competitive neutrality;
–
culture that supports supervisory and enforcement actions in support of strategic
objectives;
–
robust internal governance arrangements, supported by fit-for-purpose internal
reporting, performance monitoring and audit and assurance activities;
–
appropriate resource allocation, responsive to emerging issues, and efficient utilisation;
–
staff with necessary expertise (e.g. industry, technical and data analytics) supported by
appropriate tools;
–
sound process and outcomes realised across APRA’s core supervision, policy and
resolution functions (including appropriate utilisation of enforcement tools);
–
appropriate engagement with Australian financial sector regulators, including suitable
information sharing arrangements; and
–
fit-for-purpose statutory powers.
In each case, the Panel should focus on those areas considered to be of greatest relevance to
the review objectives.
The Panel should to the extent relevant take into account practices of, and benchmark APRA
against, comparable international prudential regulators. The Panel should also take into
account as a starting point relevant recent reviews and reports as they relate to APRA,
including the Royal Commission into Misconduct in the Banking, Superannuation and
Financial Services Industry Interim and Final Reports, the Productivity Commission’s final
report Superannuation: Assessing Efficiency and Competitiveness, the Productivity
Commission’s final report Competition in the Australian Financial System, the IMF’s
Financial System Stability Assessment of Australia (scheduled for release in early 2019) and
APRA’s own internal Enforcement Review (scheduled for completion in March 2019).
In undertaking its assessment, the Panel should take as given APRA’s legislative framework,
except as outlined above in relation to APRA’s statutory powers.
The Review is to commence in March 2019 and is to report to Government by 30 June 2019.