APRA consults on guidance for financial contingency and resolution planning

The Australian Prudential Regulation Authority (APRA) has begun consulting on guidance to accompany its two new prudential standards on financial contingency and resolution planning.

Prudential Practice Guides CPG 190 Financial Contingency Planning and CPG 900 Resolution Planning set out principles and examples of better practice to assist entities meet their requirements under the proposed new standards, CPS 190 Financial Contingency Planning and CPS 900 Resolution Planning.

APRA is in the process of finalising the standards, which are expected to come into effect from the beginning of 2024. CPS 190 will ensure all APRA-regulated entities have plans for responding to severe financial stress, while CPS 900 will require large or complex entities to take pre-emptive actions, where appropriate, so that, in the event of their failure, APRA can resolve them with limited adverse impacts on the community and the financial system.

In developing the draft guidance, APRA has paid particular attention to areas where entities have requested greater clarity on the prudential standards. 

In a first for APRA, integrated versions of the two new prudential practice guides have also been released. This new approach is intended to better support regulated entities in understanding how specific requirements and the relevant guidance relate. This initiative is part of APRA’s agenda to modernise the prudential architecture, and APRA is interested in industry feedback on its usefulness.

After a three-month consultation period, the prudential practice guides will be finalised in the first half of next year. A final version of prudential standard CPS 190 is expected later this year, while the final CPS 900 will be released in the first half of 2023.

A letter to industry outlining today’s consultation as well as copies of the draft prudential practice guides are available on the APRA website at: Strengthening crisis preparedness.