The Australian Prudential Regulation Authority (APRA) today issued a document setting out requirements it expects APRA supervised entities (ASEs) to have considered in determining whether to use, and how to use, the services of a custodian. The requirements apply only to insurance and superannuation ASEs.
The requirements seek to ensure that ASEs have satisfied themselves that their custodial arrangements are safe and transparent and that the division of risks and responsibility is mutually understood between the ASE and the custodian. In effect, the requirements do not impose any duties in addition to those that APRA would expect prudent ASEs to be practising already. They do, however, provide a framework through which the Board of each ASE can show that it has a process to assess, evaluate, monitor and enforce custodian obligations, on an ongoing basis.
The requirements have been developed following consultation between APRA and the Australian Securities and Investments Commission (ASIC), industry bodies and institutions.
APRA expects ASEs to review their existing custodian arrangements and contracts. Where there is divergence between current arrangements and contracts, and the requirements, ASEs should move to compliance with the requirements as soon as possible. In respect of Annual Certification provisions in the requirements, APRA expects these to be signed off for all balance dates after 29 June 2000.
The requirements, together with the accompanying notes, are on the APRA web site (www.apra.gov.au) under the Insurance and Superannuation icon.
For further information contact:
Mr S.G. Venkatramani
General Manager, Diversified Institutions
Australian Prudential Regulation Authority (APRA)
GPO Box 9836
SYDNEY NSW 2001
Tel: 02 9210 3267
Fax: 02 9210 3322