The Australian Prudential Regulation Authority (APRA) has issued a document setting out requirements which it expects APRA-supervised entities (ASEs) to have considered in determining whether to use, and how to use, the services of a custodian. At this stage, the requirements will only apply to insurance and superannuation operations.
The requirements have been developed for public comment following a process of consultation between APRA and the Australian Securities and Investments Commission (ASIC) and relevant industry bodies.
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.
In effect, the requirements do not impose any requirements in additional to those that prudent ASEs should already be practising. The requirements do, however, provide a framework through which Boards of ASEs can show that they have a demonstrable process, to assess, evaluate, monitor and enforce custodian obligations, on an ongoing basis.
Following the introduction of the Managed Investments Act 1998, ASIC has issued policy statements which detail the outcomes required for the holding of scheme property (ASIC Policy Statement 130 - 133). ASIC confirms that APRAs requirements support ASICs own policy objectives. In addition, ASIC will be reviewing its existing policy to ensure the same practices are recognised as part of its implementation programme.
To assist the funds management industry, ASIC and APRA have agreed that, in most circumstances, the same documentation will be accepted. The accompanying notes to the requirements provide more detail in this regard.
The requirements together with the accompanying notes are attached. Copies are also available on the ASIC web site (www.asic.gov.au) and APRA web site (www.apra.gov.au).
Comments and any questions can be e-mailed to CustRequireComments@apra.gov.au.
Alternatively, written submissions may be addressed to:
Mr S.G. Venkatramani
General Manager
Australian Prudential Regulation Authority (APRA)
GPO Box 9836
SYDNEY NSW 2001
Comments should be submitted by 1 November 1999.
For further information please contact
Ramani (S. G.) Venkatramani
APRA
02 9210 3267
Pauline Vamos
ASIC
02 9911 2178.
