The Financial Regulator Assessment Authority's (FRAA's) first review of the effectiveness and capability of the Australian Prudential Regulation Authority (APRA) is a 'targeted assessment' of APRA's supervision and resolution functions in the superannuation context, including within this, the regulator's use of data, data analytics and supporting technology.
A consultation paper released by FRAA provides more detail around the scope of the review and puts forward ten questions for stakeholder feedback.
Supervision function
FRAA's review will consider the effectiveness of APRA's 'frontline supervision' – ie the various activities carried out by the regulator to identify and respond to significant prudential risks - and APRA's capability to carry out these activities effectively.
The consultation paper seeks stakeholder feedback on the following six questions:
- 'Are APRA’s supervisory priorities clearly communicated by APRA staff to the regulated population and external stakeholders?
- Does APRA clearly communicate and implement its supervision activities, and are supervision activities appropriately targeted?
- How effective is APRA’s supervision in achieving APRA’s objectives? Are there any gaps in APRA’s supervisory activities in superannuation?
- To what extent does APRA have the appropriate organisational capabilities (including, people, data, technology, and systems) for detecting prudential risks, prioritising issues, and conducting its supervisory activities to achieve the right outcomes?
- What steps has APRA taken to effectively reduce the regulatory impost of its supervisory activities? How could APRA improve?
- How has APRA’s supervisory activities and the nature of its relationship with stakeholders changed following recent independent inquiries and reviews?'
Resolution function
The review will also consider the effectiveness of APRA’s resolution function – ie the effectiveness of APRA's approach to planning for and implementing responses to the failure of a regulated institution or a crisis in the financial system – focusing on superannuation.
FRAA has requested stakeholder feedback on the following four questions:
- How well is APRA’s resolution function communicated to and understood by the regulated population?
- How well has APRA prepared industry for the introduction of APRA’s resolution framework?
- How effective is APRA’s resolution function in promoting appropriate outcomes for members?
- To what extent does APRA have the appropriate organisational capabilities (including, people, data, technology, and systems) for achieving the right outcomes?'
Out of scope
- The review will not consider matters that are already under consideration by other reviews or consultations, including the review of the Your Future, Your Super laws.
- The review will also not assess or report on single cases.
Timing
The due date for submissions is 15 December 2022.
There is no precise completion date for the review. The FRAA states that it will deliver a report to the minister 'in 2023'.