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APRA updates Enforcement Approach to provide clarity around transparency and data reporting

Tuesday 3 September 2019

The Australian Prudential Regulation Authority (APRA) has updated its Enforcement Approach to outline how it will increase transparency around the use of its formal enforcement powers.

The revised document also sets out APRA’s intention to take stronger action against institutions that fail to meet their legal obligations to report data to APRA in full and on time.

APRA’s Enforcement Approach was published in April following a review of the regulator’s historical approach to enforcement led by Deputy Chair John Lonsdale. It sets out APRA’s “constructively tough” enforcement appetite, and willingness to use its powers more assertively to hold regulated entities and their leaders to account.

APRA’s enforcement actions can range from the imposition of licence conditions and infringement notices, to disqualifications of accountable persons under the Banking Executive Accountability Regime.

Mr Lonsdale said the Enforcement Approach now clarifies when and how APRA will publicise the action it takes.

“Getting ‘constructively tough’ is not only about taking stronger action earlier where banks, insurers and super licensees break the law, or fail to behave in an open and cooperative manner with us. It also means setting public examples where it is appropriate to do so and there’s no risk to financial stability.

“Publicising our enforcement actions not only acts as a general deterrent, it gives the community confidence that financial institutions are being held to account when they do the wrong thing,” Mr Lonsdale said.

Since adopting the new approach, APRA has repeatedly demonstrated its stronger enforcement appetite: issuing formal directions and imposing licence conditions on two superannuation licensees; and applying additional capital requirements on three major banks and one general insurer in response to risk governance shortcomings.

Mr Lonsdale said entities that failed to comply with their data reporting obligations would also be exposing themselves to potential penalties.

“As the central statistical agency for Australia’s financial sector, including other regulators, APRA must ensure the data we receive is timely and accurate. 

“As last month’s fine imposed on Westpac underlined, our reporting standards are legally binding, and we will act when necessary to ensure institutions meet their obligations. Consequently, we have also updated the Enforcement Approach to include guidance on how we will use enforcement action to ensure the data we collect remains fit for purpose,” he said.

The updated Enforcement Approach can be found on the APRA website at Enforcement

The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding $6 trillion in assets for Australian depositors, policyholders and superannuation fund members.