The Government has today released its ‘Statement of Expectations’ of the Australian Prudential Regulation Authority (APRA), as part of a reform to the governance arrangements for statutory authorities. APRA’s ‘Statement of Intent’ in response is also released today.

The Statement of Expectations provides guidance to APRA about the appropriate balance between pursuing safety and protection of beneficiaries on the one hand, and market efficiency on the other.

In the Statement of Expectations, the Government has confirmed that it is very pleased with the overall performance of APRA as a key economic regulator and that it will continue to respect APRA’s operational independence. APRA welcomes these assurances.

The Government has also confirmed that prudential regulation cannot and should not seek to guarantee a zero failure rate of prudentially regulated institutions or provide absolute protection for market participants (including consumers). “A regulatory approach of this intensity would remove the natural spectrum of risk that is fundamental to well‑functioning markets, and ultimately reduce the efficiency and growth of the Australian economy”. APRA fully supports the Government’s objectives for prudential regulation.

In its Statement of Intent, APRA has committed to further developing a supervisory approach, focussed on outcomes, that accords fully with the Government’s vision for APRA. APRA Chairman Dr John Laker said: “We look forward to a continued constructive relationship with the Government in the pursuit of a strong, robust and vibrant financial system in which the Australian community can place its confidence.”

The Statement of Expectations and Statement of Intent are available at www.apra.gov.au/AboutAPRA/upload/Statement-of-Expectations-from-Treasurer-20-Feb-07.pdf, and www.apra.gov.au/AboutAPRA/upload/Ltr-to-Treasurer-Statement-of-Intent.pdf, and published on the APRA website www.apra.gov.au as well as the Commonwealth Treasury website www.treasury.gov.au.

The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. APRA is funded largely by the industries that it supervises. It was established on 1 July 1998. APRA currently supervises institutions holding approximately $2.5 trillion in assets for 20 million Australian depositors, policyholders and superannuation fund members.

Media and industry inquiries only:
Stuart Snell, Head of Public Affairs
Australian Prudential Regulation Authority
Telephone: 02 9210 3384
Mobile: 0407 250 276

All other inquiries:
APRA Contact Centre 1300 131 060