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Enforcement

If APRA's supervisors detect issues of concern, APRA is empowered to take enforcement action against an institution, or individuals associated with that institution, to protect the interests of depositors, policyholders and members of superannuation funds.

APRA prefers to take a cooperative approach to resolving prudential issues with boards and management of the institutions it supervises. On occasions, APRA’s collaborative approach will be unsuccessful because the institution is either unwilling or is unable to cooperate. Under such circumstances, it is critical that APRA takes effective enforcement action.

APRA has considerable statutory powers to protect beneficiaries. Powers may be exercised for the purpose of ensuring an entity continues to meet prudential standards and beneficiary interests.  Where there is a potential threat to the viability of an entity, resolution powers may need to be exercised to take control of the entity, to effect an orderly restructure (such as through transfer or recapitalization) or to otherwise ensure an orderly exit of that entity from the industry. 

Although the details vary slightly by industry, typically these include the power to:

  • undertake a formal investigation into the affairs of an institution;
  • impose conditions on an institution’s licence or issue directions related to particular matters;
  • appoint a statutory manager, judicial manager or replacement trustee to manage an institution’s affairs;
  • accept enforceable undertakings (EUs) (see below);
  • take criminal action against persons or institutions; or
  • seek restraining orders.

Individuals can be removed (or ‘disqualified’) from their positions or from holding senior roles within the industries supervised by APRA. An individual will also be automatically disqualified if he or she is convicted of an offence involving dishonest conduct, or becomes bankrupt.

Disqualification process

Since 1 July 2008, any decision to disqualify an individual from holding a senior role within the industries supervised by APRA is made by the Federal Court of Australia, on application by APRA. In addition, the Federal Court has the capacity to impose a conditional ban on an individual, limiting the period of disqualification.

See further information on the disqualification process, and also the Disqualification Register of individuals who have been disqualified from holding prudentially significant roles within APRA-regulated entities.

Enforceable undertakings (EUs)

If an institution or individual is considered to have breached prudential requirements, APRA may accept an enforceable undertaking rather than impose sanctions. EUs are particularly relevant when an institution or an individual has made particular admissions to APRA concerning their conduct and remedial steps have commenced. An EU deals effectively with prudential issues. EUs also typically offer a more cost-effective and timely means of achieving an appropriate supervisory outcome than commencing formal legal action.

See a list of Enforceable undertakings APRA has accepted from people or corporations since 1 January 2005.