13 July 2023

Effectiveness and capability review of APRA

The Albanese Government welcomes the report of the Financial Regulator Assessment Authority (FRAA) into the effectiveness and capability of the Australian Prudential Regulation Authority (APRA).

As Australia’s prudential regulator, APRA plays a key role in ensuring Australia has a safe and stable financial system. APRA has supported the Australian economy through its regulation of the banking, insurance, and superannuation industries during the complex challenges of recent years.

The FRAA review acknowledges the strengths of APRA while providing recommendations that would make APRA’s regulation of the superannuation industry more future focused, and better prepare entities, the industry and the broader system for future shocks.

While the FRAA found that APRA’s supervision function within superannuation to be generally effective and capable, APRA’s resolution function is significantly less developed. As such, the review contains recommendations which focus on APRA:

  • increasing its efforts to identify and understand risks in superannuation,
  • enhancing its staffing and data and technology capabilities,
  • improving transparency and timeliness in its communications, and
  • developing APRA’s resolution capability in superannuation.

The Government welcomes APRA’s collaboration with the FRAA through this process and its receptiveness to the review’s findings.

In the 2023‑24 Budget, the Government announced our intention to reduce the frequency of the FRAA review cycle from a biennial basis to a five yearly cycle. This will give appropriate time for regulators to embed previous recommendations and ensure future reviews are meaningful and substantive.

The FRAA secretariat function will continue to operate within Treasury between review cycles. These changes are expected to be legislated later this year.

The next FRAA review will focus on the effectiveness and capability of the Australian Securities and Investments Commission (ASIC) and will commence in 2026. The next review of APRA will commence in 2027.

Given the new duration of the review cycles, the three current members of the FRAA panel Nicholas Moore AO (Chair), Fiona Crosbie and Craig Drummond have tendered their resignation.

The FRAA has delivered two impactful reports with well‑considered recommendations, which upon implementation, will support greater effectiveness and capability of ASIC and APRA for years to come.