The Australian Prudential Regulation Authority (APRA) today released its Annual Report for 2001/02, which highlights progress made with major reforms of Australias prudential regulatory and supervisory framework and a marked increase in APRAs supervisory and enforcement actions.

"While the year has been demanding, APRA has made substantial progress with significant reforms and has instituted a number of changes that continue to increase our effectiveness as the prudential regulator," said APRA Chief Executive Officer, Mr Graeme Thompson.

"A milestone was the new supervision regime for general insurers introduced on 1 July 2002. For APRA, this represents the culmination of a major reform project that was initiated soon after our establishment in 1998. It involved a fresh assessment of the strength of all insurers against new, higher prudential standards," he said.

In addition, APRA proceeded with important reform work on conglomerate groups that include a deposit-taker, on "good practice" standards for outsourcing by deposit-takers and on harmonising supervisory requirements for life insurers and friendly societies.

Supervision of financial institutions was significantly intensified during the year, with a particular focus on superannuation funds. Off-site reviews were increased substantially.

APRA conducted a total of 1,498 visits, consultations and tri-partite reviews, representing an increase of around 27 per cent from the previous year. It also completed the task of implementing a risk assessment and supervisory strategy for 4,000 of the core institutions that it regulates. A more sophisticated risk-rating system will be rolled-out in the current year.

Enforcement actions undertaken by APRA doubled during 2001/02 with 199 actions against regulated institutions compared with 96 in the previous year.

In addition to improving its early warning systems, APRA has introduced more formal processes to ensure that attention to high-risk institutions is escalated to senior levels in APRA and all appropriate resources are brought to bear more readily in relation to problem cases.

APRA also made further progress in developing performance indicators for itself, including the Performing Entity Ratio (PER) and the Money Protection Ratio (MPR). Based on the estimated number of failed institutions and losses incurred by depositors, policyholders and fund members divided by the number of regulated entities and "supervised dollars" since APRAs inception in 1998, PER and MPR sit at 99.8 per cent and 99.6 per cent respectively.

APRAs total operating expenditure in 2001/02 was $55.8 million, up from $52.5 million the previous year. APRA is funded by levies on regulated financial institutions.

A copy of APRAs Annual Report is available from the APRA Website at http://www.apra.gov.au/AboutAPRA/Annual-Report-2002.cfm or by contacting APRA on 1300 131 060.

APRA is the prudential regulator of the financial services industry including banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. It currently regulates $1.5 trillion in assets for 20 million Australians.