Under the proposed requirements:

• APRA-regulated institutions will need to develop their own fit and proper policies that include assessment of the fitness and propriety of individuals to act in positions of responsibility;
• these policies must, at a minimum, address the fit and proper requirements that APRA expects responsible persons to meet, which are set out in the proposed prudential standards; and
• APRA will only become involved in an assessment when it has specific concerns about an individual.

“The proposals are designed to reflect community expectations about persons who fill positions of responsibility in these industries and will set minimum benchmarks for people in, or wishing to enter, these industries at director, senior management or advisory level,” he said.

APRA plans further governance initiatives in the form of harmonised prudential standards. Proposals relating to general insurance were put forward in APRA’s discussion paper on ‘Prudential Supervision of General Insurance: Stage II Reforms’, which was released in November 2003. APRA expects to provide further information on governance standards around mid 2004 after it considers responses to the general insurance reforms.

Comments on the consultation paper and the prudential standards are invited by 28 May 2004. A copy of the consultation paper and draft prudential standards are available on the APRA website at http://www.apra.gov.au/Policy/Draft-Prudential-Standards-Fit-and-Proper.cfm

A “fit and proper” regime for the superannuation industry is being dealt with separately through the Superannuation Safety Amendment Bill, currently before the Parliament.

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 $1.7 trillion in assets for 20 million Australian depositors, policyholders and superannuation fund members.