14 February 2018

Strengthening APRA's crisis management powers


The Turnbull Government is ensuring Australia’s financial system remains unquestionably strong – by strengthening the Australian Prudential Regulation Authority’s (APRA’s) crisis management powers.

Today the Senate passed the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2017 which provides:

  • clear powers that enable APRA to set requirements on resolution planning and ensure banks and insurers are better prepared for a crisis; and
  • an expanded set of crisis resolution powers that equip APRA to act decisively to facilitate the orderly resolution of a distressed bank or insurer.

These reforms represent a significant leap in APRA’s capability, and implement a recommendation from the Government’s Financial System Inquiry.

One of the key reasons Australia successfully navigated the Global Financial Crisis was the robust prudential regulation put in place by the Howard Government. However, international experience during the crisis demonstrated that regulators also need powerful, flexible and timely tools to resolve financial institutions in distress.

The prudent time to strengthen crisis powers is when the financial system is healthy.

This Bill is one of a number of reforms the Turnbull Government is delivering to improve the accountability, competitiveness, and stability of the banking system. It follows the recent passage of legislation that, amongst other things, empowers APRA to issue rules relating to the lending practices of non-bank lenders.

The Government is taking action to ensure the prudential regulator is adequately equipped to manage financial stability risks.