The Australian Prudential Regulation Authority (APRA) has today released in final form four prudential standards — on governance, fitness and propriety, outsourcing and business continuity management — that will consolidate and replace 12 existing standards across the authorised deposit-taking (ADI), general insurance and life insurance industries.
The consolidated standards closely reflect the existing industry-specific prudential standards, with minor amendments to clarify requirements and ensure consistent application across industries.
The consolidated standards recognise that, on behavioural matters, the risks facing regulated institutions in each of these industries are very similar. APRA has long sought to apply a consistent, harmonised approach to the setting of prudential requirements for regulated institutions, where appropriate. Harmonisation simplifies compliance, particularly for groups that operate across regulated industries. Stakeholder surveys conducted by APRA in 2009 and 2011 also highlighted the importance industry places on a harmonised prudential framework.
Drafts of the four consolidated prudential standards were released in December 2010 for industry consultation. Submissions were supportive of APRA’s initiative and provided helpful feedback on technical matters, which APRA has taken into account. Minor consequential amendments have also been made to Prudential Standard GPS 221 Risk management: Level 2 insurance groups to remove material now contained in the consolidated standards.
Along with the final prudential standards, APRA today released a letter responding to industry submissions. This letter is available on the APRA website at: www.apra.gov.au/CrossIndustry/Documents/Response%20letter%20consolidating%20prudential%20standards.pdf
The consolidated standards will be effective from 1 July 2012 and can be found on the APRA website under the ‘Prudential Framework’ page for each industry:
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 $3.7 trillion in assets for 22 million Australian depositors, policyholders and superannuation fund members.
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