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A message from APRA Deputy Chair John Lonsdale

APRA Deputy Chair, John Lonsdale

They say that a week’s a long time in politics, meaning circumstances and fortunes can fluctuate rapidly in a short period of time.

But can the same be said of the financial services industry?

It’s been 12 months since Commissioner Kenneth Hayne handed down the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Over the past month or so, there has been commentary on whether the Royal Commission fixed the issues that led to such poor outcomes for consumers and so badly damaged the industry’s reputation.

Australia’s financial sector is the third biggest in the country (behind health and education, and mining) in terms of economic output1 and employs more than 800,000 people2. Many of the issues raised during the Royal Commission are complex, interconnected and linked to failings in governance and culture that have built up over many years. It’s not realistic to expect every problem to have been solved in the space of 12 months, especially when many of Commissioner Hayne’s recommendations require consultation and legislation. This takes time, and it’s important to get things right to avoid unintended negative consequences. Most importantly, restoring public confidence in the industry’s willingness to put people ahead of profits will also take several years.

Despite this, the industry has made progress in addressing a number of Commissioner Hayne’s concerns, especially in the management of non-financial risks, including governance, culture remuneration and accountability (GCRA). For example, 36 of the country’s biggest banks, insurers and superannuation licensees are in the process of implementing remediation plans in the wake of the risk governance self-assessments APRA asked them to carry out in 2018.

One need also only look at the more frequent – and public – use of formal enforcement action by APRA and the Australian Securities and Investments Commission (ASIC) to see that the regulators have evolved their approach, and entities and executives who do the wrong thing can expect to be held to account. Expect to see more focus on transparency and accountability from APRA in 2020.

In this edition of APRA Insight, we examine how APRA has responded to the Royal Commission, starting with an update on our progress fulfilling the 10 recommendations directed to us, as well as the 12 referrals for us to investigate. We take a closer look at APRA’s evolving approach to supervising risk culture, and also set out how APRA and ASIC are meeting their commitment to work more closely together to deter, identify and sanction behaviour or practices that undermine financial safety or lead to poor consumer outcomes.

In the aftermath of this summer’s bushfire season, we provide a visual depiction of how catastrophe events impact on capital resilience in the general insurance industry, while APRA Explains goes back a step to answer one of the most fundamental questions to prudential regulation – what exactly is capital?

Finally, APRA’s highly regarded Graduate Program is once again accepting new applicants from Friday, 28 February. If you are – or you know – a talented, creative recent university graduate with a curious, analytical mind and an interest in finance, we tell you what to expect and why you should apply.


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, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding $6 trillion in assets for Australian depositors, policyholders and superannuation fund members.