The Australian Prudential Regulation Authority (APRA) is a

statutory authority A statutory body or statutory authority is a body set up by law (statute) that is authorised to implement certain legislation on behalf of the relevant country or state, sometimes by being Primary and secondary legislation, empowered or deleg ...

of the

Australian Government The Australian Government, also known as the Commonwealth Government, is the national government of Australia, a federal parliamentary constitutional monarchy. Like other Westminster-style systems of government, the Australian Government i ...

and the prudential regulator of the

Australia Australia, officially the Commonwealth of Australia, is a Sovereign state, sovereign country comprising the mainland of the Australia (continent), Australian continent, the island of Tasmania, and numerous List of islands of Australia, sma ...

financial services Financial services are the Service (economics), economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, acco ...

industry. APRA was established on 1 July 1998 in response to the recommendations of the Wallis Inquiry. APRA's authority and scope is determined pursuant to the .

Regulatory scope

APRA was established on 1 July 1998. It oversees banks,

credit union A credit union, a type of financial institution similar to a commercial bank, is a member-owned nonprofit organization, nonprofit financial cooperative. Credit unions generally provide services to members similar to retail banks, including depo ...

building societies A building society is a financial institution owned by its members as a mutual organization. Building societies offer banking and related financial services, especially savings and mortgage lending. Building societies exist in the United Kingdo ...

friendly societies A friendly society (sometimes called a benefit society, mutual aid society, benevolent society, fraternal organization or ROSCA) is a mutual association for the purposes of insurance, pensions, savings or cooperative banking. It is a mutual org ...

general insurance General insurance or non-life insurance policy, including automobile and homeowners policies, provide payments depending on the loss from a particular financial event. General insurance is typically defined as any insurance that is not determine ...

health insurance Health insurance or medical insurance (also known as medical aid in South Africa) is a type of insurance that covers the whole or a part of the risk of a person incurring medical expenses. As with other types of insurance, risk is shared among ma ...

reinsurance Reinsurance is insurance that an insurance company purchases from another insurance company to insulate itself (at least in part) from the risk of a major claims event. With reinsurance, the company passes on ("cedes") some part of its own insu ...

, and life insurance companies, and most members of the superannuation industry. It ensures that these institutions keep their financial promises; that is, that they will remain financially sound and able to meet their obligations to depositors, fund members and policy holders. APRA currently supervises institutions holding A$8.6 trillion in assets for Australian depositors, policyholders and superannuation fund members. APRA is largely funded by levies on the financial institutions that it supervises.

Executive

APRA is governed by an Executive Group, usually consisting of four people. All are statutory appointees. The current chair of APRA is John Lonsdale. Helen Rowell and Margaret Cole are Deputy Chairs. Suzanne Smith and Therese McCarthy Hockey are additional APRA Members.

History

The Insurance and Superannuation Commission (ISC) was formally established on 23 November 1987, following the proclamation of the Insurance and Superannuation Commissioner Act 1987. The commission was based at the Australian Automobile Association Building,

Canberra Canberra ( ) is the capital city of Australia. Founded following the federation of the colonies of Australia as the seat of government for the new nation, it is Australia's largest inland city and the eighth-largest city overall. The ci ...

212 Northbourne Avenue and also had offices in Melbourne and Sydney. The Insurance and Superannuation Commission was absorbed into the Australian Prudential Regulation Authority on 1 July 1998. In June 1996, the Financial System Inquiry (known as the Wallis Inquiry) was established to examine the results of the deregulation of the Australian financial system, to examine the forces driving further change, particularly technological, and recommend changes to the regulatory system to ensure an "efficient, responsive, competitive and flexible financial system to underpin stronger economic performance, consistent with financial stability, prudence, integrity and fairness." At the time, the regulators of the Australian financial services industry were based on the institutions and not the regulatory function. APRA's predecessor regulators were the Insurance and Superannuation Commission, the

Reserve Bank of Australia The Reserve Bank of Australia (RBA) is Australia's central bank and banknote issuing authority. It has had this role since 14 January 1960, when the ''Reserve Bank Act 1959'' removed the central banking functions from the Commonwealth Bank. Th ...

and the Australian Financial Institutions Commission (AFIC). The Wallis Inquiry recommended a new structure. The role of the Reserve Bank of Australia (RBA) was amended to deal with

monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often a ...

and systemic stability with the Payments System Board considering payments systems regulation. The role of the Australian Prudential Regulation Commission (later to become APRA) was amended to deal with prudential regulation of

authorised deposit-taking institution Financial institutions in Australia are only permitted to accept deposits from the public if they are authorised deposit-taking institutions (ADIs). The ADI’s authority is granted by the Australian Prudential Regulation Authority (APRA) under the ...

s (ADIs), life and general insurance, and superannuation including

Industry superannuation An industry superannuation fund (or, simply, 'industry fund') is an Australian superannuation fund originally established to provide for the retirement of workers from a specific industry. While industry funds are no longer tied to specific in ...

. The Corporations and Financial Services Commission was renamed and its role expanded as the Australian Securities and Investments Commission (ASIC) to deal with market integrity, consumer protection and corporations. APRA was established on 1 July 1998 under the ''Australian Prudential Regulation Authority Act 1998''. APRA became prominent in the collapse of

HIH Insurance HIH Insurance was Australia's second-largest insurance company before it was placed into provisional liquidation on 15 March 2001. The demise of HIH is considered to be the largest corporate collapse in Australia's history, with liquidators est ...

in 2001 and for its investigation into the

National Australia Bank National Australia Bank (abbreviated NAB, branded nab) is one of the four largest financial institutions in Australia (colloquially referred to as "The Big Four") in terms of market capitalisation, earnings and customers. NAB was ranked 21st-la ...

foreign currency deal scandal in 2004. APRA took over the previous role of the Private Health Insurance Administration Council in July 2015. In 2018, Peter Harris, the chair of the

Productivity Commission The Productivity Commission is the Australian Government's principal review and advisory body on microeconomic policy, regulation and a range of other social and environmental issues. The Productivity Commission was created as an independent a ...

, was critical of the role of APRA in limiting price competition in banking. Representatives of APRA appeared before the

Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, also known as the Banking Royal Commission and the Hayne Royal Commission, was a royal commission established on 14 December 2017 by the Austra ...

during 2018. In 2018, APRA created the restricted authorised deposit-taking institution (RADI) licensing framework to encourage new entrants and competition to the existing banking system.

Prudential Standards and Practice Guides

APRA establishes prudential standards with which regulated institutions must comply. It also creates and maintains ''Prudential Practice Guides'' (PPGs) to provide guidance on APRA's view of "sound practice" in particular areas for specific industries, as well as areas common to most APRA-regulated entities ("cross-industry guides"). PPGs frequently discuss statutory requirements from legislation, regulations or APRA's prudential standards, but do not themselves create enforceable requirements.

Notes

References

External links

Official site
{{Authority control Deposit insurance Financial regulatory authorities of Australia Commonwealth Government agencies of Australia Prudential 1998 establishments in Australia Government agencies established in 1998