Prudential policy
Prudential standards and guidance
APRA’s purpose is to ensure Australians' financial interests are protected and that the financial system is stable, competitive and efficient. APRA sets minimum standards for the financial entities it regulates, supported by guidance and overseen through supervision.
APRA’s minimum requirements are set out in legally enforceable Prudential Standards. These standards cover five key areas: governance, risk management, financial resilience/business operations, resolution and reporting. Guidance to support the standards are set out in accompanying Prudential Practice Guides (PPGs).
The standards and PPGs for banks, insurers and RSE licensees are collectively known as the Prudential Framework. The standards and PPGs for each industry are available on the APRA website:
Authorised deposit-taking institutions
General insurance
Life insurance
Private health insurance
Superannuation
Policy development
APRA maintains a program of regular policy reviews to ensure the prudential standards and guidance is up to date and fit for purpose. APRA announces its policy priorities at the beginning of each calendar year to provide a forward view of planned changes to the prudential framework.
The policy priorities for 2023 are available here.
When APRA develops new standards and PPGs, or proposes changes to existing requirements and guidance, it conducts a formal, public consultation with regulated entities and other industry stakeholders on the proposals. Feedback from stakeholders as part of these consultations is then used by APRA to finalise its policy proposals.
Open and recent consultations are available here.
Regulatory impact statements are available here.
Modernising the prudential architecture
In 2021, APRA announced a strategic initiative to Modernise the prudential architecture. This is a multi-year, iterative and evolutionary program of initiatives, which aim to make the Prudential Framework clearer, simpler and more adaptable.
The financial landscape is changing at a rapid pace: the digitisation of finance is accelerating, new business models are emerging, and innovation is testing traditional regulatory boundaries. As the financial system evolves, regulation needs to adapt.
The program to modernise the architecture will involve incremental changes in the design of the framework, in how APRA writes policy, and in how industry accesses and navigates it. The end goal is a digital framework that will be easier for the industry to understand and comply with, and for APRA to supervise and maintain – and ultimately to better protect Australians’ financial interests.
For further information on this initiative, see MPA Information Paper available here.