The Australian Prudential Regulation Authority (APRA) today welcomed the tendering of the Palmer Report in evidence at the HIH Royal Commission.

APRA commissioned the Report in October 2001 and provided a copy to the Commission in July 2002 to assist its inquiries into the collapse of HIH. The Report has remained confidential until its tender in evidence today.

Mr John Palmer wrote the Report after retiring as head of Canadas Office of the Superintendent of Financial Institutions (OSFI). He has since been appointed Deputy Managing Director of the Monetary Authority of Singapore (MAS). Mr Palmer is acknowledged as an international expert on prudential regulation.

APRAs brief to Mr Palmer was to review the regulators role in its formative years in relation to the collapse of HIH and to advise on improvements in its regulatory and supervisory regime. Mr Palmer conducted extensive interviews with relevant staff and former employees of APRA and of its predecessor, the Insurance and Superannuation Commission (ISC), and also had unrestricted access to APRAs files in relation to HIH and FAI. On the basis of his review of APRAs supervision of HIH up to March 2001, he makes a number of recommendations regarding the agencys operations and its powers and resources.

APRA accepts most of the recommendations, many of which have been acted upon already or are being implemented progressively. APRAs responses to these recommendations have also been tendered in evidence today.

APRA Chief Executive Officer, Mr Graeme Thompson, said that the Palmer Report and its recommendations were very valuable in identifying a number of areas where APRAs processes were deficient in the period from 1999 to 2000.

"However, the Report also describes the inadequate regulatory framework inherited by APRA, the challenges that its management and staff faced in building a new organisation from nine predecessor agencies and the inevitable difficulties these created in supervising HIH," Mr Thompson said.

He added: "More importantly, the Palmer Report confirms that the reforms and improvements APRA has implemented post-HIH are on the right track. As a result of significant legislative changes and many reforms in its policies and processes made over the past two years, APRA is today a much stronger and more effective regulator".

In September 2002, APRA provided a detailed submission on regulatory policy for general insurers to the Commission. The Future Policy submission describes the major changes that APRA introduced to the prudential regulatory regime in July this year and its recommendations for further enhancements.

Copies of the Palmer Report and Recommendations, Responses to the Recommendations from APRA and the Future Policy submission are available on APRAs website: www.apra.gov.au

• The Palmer Report (PDF 1.14MB)
• APRA's response to recommendations in the Palmer Report (PDF 77KB)
• APRA's future policy directions for the regulation and prudential supervision of the general insurance industry (PDF 879KB)

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.