Opening Statement to Senate Economics Legislation Committee – June 2026

Thank you for the opportunity to appear before you again today.

I would like to begin by assuring the Committee that Australia’s financial system remains strong and stable, underpinned by robust prudential regulation and supervision. Australians can be confident in the resilience of the banks, insurers and superannuation trustees that APRA oversees.

At the same time, the global environment is increasingly volatile, with risks arising across geopolitical, technological, operational and financial channels. As set out in APRA’s latest System Risk Outlook, the effects of geopolitical conflict, cyber and operational risks, plus rapid technological change are some of the issues reshaping the risk landscape in an increasingly interconnected world. While our financial system is well positioned to absorb severe shocks, sustaining that resilience requires vigilance and strong risk management across the system.

Rapid advances in artificial intelligence are creating new opportunities, but also new vulnerabilities. Adoption of AI across the financial system is accelerating, but governance and risk management practices are not keeping pace. APRA has made it clear to industry that stronger oversight and controls in this area are essential, and we are increasing supervisory focus on AI governance and related supplier risks.

Cyber security remains a top priority. The frequency and sophistication of cyber incidents continue to increase, including the use of advanced technologies to exploit vulnerabilities. We are working closely with regulated entities to lift cyber resilience and ensure critical financial services can continue to operate through disruption.

Alongside these risks, we are closely monitoring emerging vulnerabilities in global financial markets, including in areas such as private credit. While exposures in Australia remain relatively contained, international developments have the potential to transmit risks into the domestic system, and we are maintaining a strong supervisory focus in this area.

Importantly, despite this more challenging environment, the fundamentals of Australia’s financial system remain sound. Banks and insurers are well capitalised, liquidity positions are strong, and stress testing continues to show the system can withstand a range of severe but plausible scenarios. This leaves the system well placed to continue supporting households and businesses, even if economic conditions deteriorate.

In response to this evolving risk landscape, APRA is taking action across the system and within each of the industries we supervise.

Working closely with our partners on the Council of Financial Regulators, we are strengthening system-wide resilience. This includes enhancing crisis preparedness arrangements, improving information sharing, and progressing work to strengthen critical financial infrastructure and contingency arrangements.

We are also sharpening our supervisory intensity. This includes clearer expectations on risk management, targeted supervisory reviews, and, where necessary, enforcement action to hold entities to account for failing to meet prudential standards. APRA has increased capital overlays and imposed licence conditions on several entities since it last appeared before this committee and disqualified another individual under the terms of the Financial Accountability Regime.

Following last year’s review of major superannuation trustees covering around 95% of platform assets under management, APRA has directed trustees to urgently address weaknesses and report breaches. Since then, we have taken enforcement action against five trustees for investment governance failings, imposing licence conditions on Diversa Trustees, Fiducian, Equity Trustees and HTFS, and accepting a court enforceable undertaking from Netwealth.

We continue to collaborate closely with ASIC, who have taken a number of actions that are now before the courts. 

We will continue to pursue remediation and take further action where trustees fail to meet prudential requirements and improve member outcomes as directed. We are also considering whether further enhancements to the prudential framework are needed.

We know this committee is interested in action related to the First Guardian and Shield managed investment schemes and the devastating impact their collapse has had on thousands of people.

As the prudential regulator, we are responsible for ensuring superannuation trustees adhere to the requirements in the SIS Act and prudential standards relating to onboarding, ongoing due diligence and monitoring of investment options. It is the trustee’s responsibility to determine whether or not options are suitable for them to offer and monitor accordingly against the rules that are set. Managed investment schemes are regulated by ASIC.

APRA continues to cooperate with ASIC and Treasury on this matter. The final policy positions to address the response to First Guardian and Shield are a matter for Government.

In banking, we remain focused on both financial and non-financial risks. This includes ensuring lending standards remain sound in the context of household indebtedness, rising inflation and rising interest rates. Just last week we confirmed our macroprudential settings would remain steady.

In insurance, we continue to monitor a range of structural and emerging risks, including the impact of climate-related risks on home insurance affordability, availability and the protection gap. Our stress testing and climate vulnerability assessments are deepening understanding of how these risks could affect households, insurers and broader financial system resilience.

These sector-specific priorities sit alongside our broader strategic priority that we term, “getting the balance right” – achieving our safety and stability objectives in the most efficient way possible. Last year, we committed to nine initiatives to support regulatory balance. Many of these are finalised and will result in meaningful reduction in burden for industry.

This includes progressing reforms to improve proportionality in the banking framework by formalising a three-tiered prudential framework. The proposal introduces a new category for the largest institutions, lifts thresholds for mid-sized banks, and suggests more tailored transition arrangements. We have also identified additional opportunities to further free up capital to be invested in productive purposes, including through targeted changes to our bank capital framework.

In summary, APRA is seeing a more uncertain and complex risk environment, shaped by geopolitical developments, technological change and evolving market dynamics. Our focus is on ensuring that resilience is maintained — through strong supervision, targeted action, and close collaboration with industry and our regulatory partners.

Before closing, I would like to acknowledge Deputy Chair Margaret Cole, whose term concludes at the end of June. Ms Cole has made a significant contribution to APRA, leading with integrity and commitment to the public interest. Her significant experience across the public and private sector has been an asset, particularly in strengthening our approach to enforcement. We thank her for her leadership and service over her five years with APRA. With that, my colleagues and I are happy to take your questions.