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Annual update on APRA-ASIC engagement - December 2021

The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) each play important roles in protecting the financial well-being of the Australian community through a safe, fair, competitive and efficient financial system. Reinforcing Australia’s twin peaks model of regulation, the agencies have a longstanding commitment to working together to optimise outcomes and minimise regulatory burden. 

A Memorandum of Understanding, most recently updated in November 2019, is the foundation of the agencies’ commitment to work together. It is underpinned by an engagement structure that enhances cooperation through regular strategic discussions between the APRA Members and ASIC Commissioners; including through the APRA-ASIC Committee and supporting Standing Committees of senior members from each agency. These formal arrangements are supported by various working groups and information sharing between both agencies.

APRA and ASIC have worked closely on a number of matters of mutual interest in relation to cross-industry and industry-specific issues in 2021.  

The agencies have worked together to deliver long-term benefits through a number of significant law reforms. The Australian Government’s new Financial Accountability Regime (FAR) has been a particular focus in this regard. The FAR is aimed at improving the governance and risk management of entities in the banking, insurance and superannuation sectors, and increasing transparency and accountability across these sectors. APRA and ASIC are working together to develop the framework for jointly administrating the FAR to enable collaboration and coordination, and to minimise duplication, in areas of joint regulatory interest. 

Both agencies continue to work together to support the financial system, protect consumers and support the economic recovery from the COVID-19 pandemic. For example, the agencies have:

  • collaborated on loan repayment deferrals and borrower hardship, and a range of issues concerning the insurance sector (including in relation to business interruption insurance and individual disability income insurance).
  • participated in a cross-agency working group with the Treasury and the Australian Financial Complaints Authority to engage with industry on business interruption insurance test cases being heard in the Federal Court. Working together helped progress these test cases in a timely and efficient manner and generated significant engagement from industry. 
  • co-chaired a Trans-Tasman Supervisory College during 2021 that brought together six Australian and New Zealand regulators to consider issues related to consumer protection, prudential regulation and conduct regulation (among others).
  • engaged with jointly regulated financial service providers on the issues of cyber readiness and operational resilience. Also, as part of the Council of Financial Regulators, APRA and ASIC have been developing a protocol to deal with the management of a cyber incident at a financial service provider.  

There continues to be significant engagement in the area of superannuation, with ASIC and APRA acting to support confidence in the superannuation industry and deliver quality superannuation outcomes for Australians. The implementation of the Member Outcomes obligations and Design and Distribution Obligations, administered by APRA and ASIC respectively, saw the agencies work together to ensure trustees understood the interaction between the two sets of obligations. Outputs from that work included a joint letter to industry, joint speaking engagements and a CEO roundtable. There has also been joint communication to industry regarding the agencies’ expectations in relation to superannuation trustees’ oversight of advice fee deductions. 

APRA and ASIC have also undertaken strategic work to strengthen cooperation on enforcement matters. An example of this cooperation was the agencies’ engagement during their respective investigations in relation to AMP superannuation funds. The court enforceable undertaking accepted by APRA in November 2021 was designed to address regulatory concerns of both APRA and ASIC with AMP Super.

More generally, information sharing — ranging from sharing insights from supervision activities to formal exchanges of relevant information (including in relation to enforcement matters) — continues to be central to engagement between the agencies. Collaboration on industry data collections continues to provide opportunities for both agencies to effectively and efficiently collate insights to inform their respective work. Over the course of the past year, the agencies’ cooperation was bolstered by the implementation of the new statutory regime, implemented via the Financial Sector Reform (Hayne Royal Commission Response) Act 2020, that facilitates and removes barriers to sharing of intelligence and information. This legislation has helped formalise the agencies’ commitment to cooperation. 

Over the next 12 months, APRA and ASIC will continue to collaborate; working together to deliver coordinated and efficient regulatory outcomes and to support the ongoing safety and strength of the Australian financial system.