The Minister for Financial Services and Superannuation, Bill Shorten, has released for public consultation a paper titled Strengthening APRA's Crisis Management Powers which seeks comments on a range of options to enhance Australia's financial sector, particularly prudential regulation.

 

"The consultation paper forms part of an ongoing review process to ensure our financial sector regulation remains ready to meet the needs of our economy," Minister Shorten said.

 

The options canvassed in the paper aim to:

  • strengthen the Australian Prudential Regulation Authority's (APRA's) crisis management powers in relation to authorised deposit-taking institutions (ADIs), superannuation entities and general and life insurers, including:
    • the ability to appoint statutory managers to a failing institution;
    • extending APRA's capacity in relation to foreign entities;
    • providing APRA with the ability to direct failing institutions in relation to disclosure requirements;
    • ensuring the Financial Claims Scheme operates more smoothly to provide greater certainty; and
    • providing APRA with directions power in superannuation to take pre-emptive action to address prudential concerns including the removal of an individual trustee, director or officer.
  • simplify APRA's regulatory powers across the various Acts it administers in the banking, insurance, and superannuation sectors, given that many firms operate across sectors; and
  • make a series of minor and technical amendments to enhance the effectiveness of legislation administered by APRA.
  • In the wake of the global financial crisis, Australia has made considerable progress in strengthening its resolution arrangements for failing financial institutions.
  • The options canvassed in the consultation paper bring our regulatory framework more closely into line with the G20 endorsed new international standard for crisis management arrangements: the Financial Stability Board (FSB) Key Attributes of Effective Resolution Regimes.

 

As part of the consultation process the Government is also seeking views on the regulatory impact associated with these measures, and this information will be used in preparation of the Regulatory Impact Statement which the Government needs to consider before deciding on which reform options it will develop further.

 

The consultation paper is available here. The closing date for submissions is 14 December 2012.