On 24 September 2021, the Australian Prudential Regulation Authority (APRA) released a letter confirming its updated policy priorities for the remainder of 2021 in light of the ongoing impacts of COVID-19 and other regulatory changes on regulated entities.
APRA states that its focus for Q4 is centred on the completion of key reforms to strengthen financial resilience. A summary is below.
APRA also plans to release an Information Paper setting out its framework for the use of macroprudential policy tools in Q4 2021.
Revised policy priorities for Q4 2021
Cross industry
- APRA plans to finalise guidance on managing the financial risks of climate change in Q4 2021.
[Note: APRA consulted on draft CPG229 Climate Change and Financial Risks earlier in the year (Summary in Governance News 28/04/2021 at p10)]
- APRA will release new draft standards for financial contingency planning and resolution for consultation in November 2021 with a view to finalising the changes in 2022. APRA expects that the new standards will come into effect in 2023.
- APRA plans to release CPG 511 Remuneration guidance in Q4 2021. However, APRA has pushed back the consultation on new remuneration disclosure requirements (changes to CPS511) to 2022. The planned commencement date is still 2023.
- APRA's plans to consult on CPS 520 Fit and Proper are unchanged – the regulator plans to consult on in 2022. No planned effective date is specified.
Delays
- Consultation on APRA's stress testing prudential practice guide has been delayed until 2022
- APRA has pushed back the planned consultation and commencement dates for operational resilience standards – APRA now plans to consult in 2022 with a view to the changes coming into effect in 2024
- APRA has also pushed back the planned commencement dates for CPS510 Governance and CPS 220 Risk Management by one year to 2024
- NOHC Authorisation guidelines will now be finalised in 2022 (not Q4 2021)
Banking
- APRA will finalise: APS 110 Overall Approach to Capital Requirements; APS 112 Standardised Approach to Credit Risk and APS 113 Internal Ratings Approach to Risk in Q4 2021. The new standards are expected to come into effect in 2023.
- APRA will also finalise APS 220 Credit Risk Management. No expected commencement date is specified.
Delays
- The planned consultation and commencement of APS 330 Disclosure Requirements have been deferred: consultation will now take place in 2022 (not Q4 2021). APRA plans for the changes to come into effect in 2024 (rather than 2023)
- APS 117 Interest Rate in the Banking Book will be finalised in 2022 (not Q4 2021) and is expected to come into effect in 2024 (not 2023)
- Standards/guides on stored value facilities will be consulted on and finalised in 2022 and are expected to come into effect in 2023
Insurance
- APRA will consult on ASSB 17 and LAGIC updates and changes to the PHI capital framework in Q4 2021. The expected effective date for these changes is 2023.
Delays
- Standards for offshore reinsurers and LPS117 are expected to be finalised in 2022 (not Q4 2021). The planned commencement date remains 2023.
Superannuation
- APRA will finalise SPS 250 and SPG 250 Insurance in Superannuation ahead of a more comprehensive review of other key standards in 2022. The expected effective date for the changes is 2022.
- SPS 310 audit will be consulted on in Q4 2021
- There has been no change to APRA's plans to consult on the following in 2022:
- SPS515 Strategic Planning member Outcomes
- SPS510 Governance
- SPS220 Risk Management
- SPS521 Conflicts of Interest
Delays
- APRA will consult on SPS530 Investment governance in Q4 2021 but the changes are not expected to be finalised until 2022 (rather than Q4 2021).
[Note: On 29 September 2021, APRA released draft changes to SPS530 for consultation. The due date for submissions is 16 February 2021.]
APRA intends to provide a 'full update' on its policy agenda for the 2022-23 period 'early next year'.
[Source: APRA policy priorities: Interim update 24/092021]