To ensure that the financial system is "protected today and prepared for tomorrow," the Australian Prudential Regulation Authority (APRA) released its policy and supervision priorities for the next 12 to 18 months yesterday.
The papers outline APRA's key focus areas as it continues to protect financial stability and the interests of insurance policyholders, bank depositors, and superannuation members, which are consistent with the strategic objectives outlined in the most recent Corporate Plan.
APRA's 2023 agenda focuses on embedding recent regulatory reforms, strengthening operational resilience, and ensuring that entities have sufficient financial strength to act as a buffer against any emerging financial stresses in a time of global economic uncertainty.
Priorities for policy in 2023 include:
completing key reforms to improve outcomes for superannuation members and strengthen the financial and operational resilience of APRA-regulated entities;
advancing APRA's plan to modernize the prudential architecture, a key strategic initiative aimed at making the framework easier to understand, more adaptable, and more clear; and examining fundamental standards, such as conglomerate group regulation and governance.
The following are key supervision priorities for 2023:
enhanced supervision of cyber resilience through careful monitoring of breaches and in-depth assessments;
incorporating the capital reforms for banks and insurers;
continuing to hold trustees accountable in order to improve the outcomes for superannuation members; and ongoing work to solve problems with insurance's sustainability, affordability, and availability.
"Following several years of regulatory reform, 2023 will bring a lighter APRA policy load," stated APRA chairman John Lonsdale. As a result, regulated entities will be able to concentrate on addressing challenges in the operating environment in the coming period and integrating prior major reforms, such as capital reforms, into banking and insurance.
"We will continue to focus on key priority areas for supervision. The significant data breaches that occurred at Optus and Medibank late last year highlight just why operational resilience, including cyber preparedness, continues to grow in importance as a supervisory priority.
"While the superannuation sector can anticipate no slowdown in our efforts to expose and eradicate underperforming products or actions that are contrary to members' best interests," "we have important work to do on climate risk, governance, culture, and recovery planning."
In August 2022, APRA released its Corporate Plan for 2022-2023, which aims to improve the financial stability of the insurance, banking, and superannuation industries over the next four years. The plan is specifically intended to respond to the impact of emerging technologies, geopolitical tensions, inflationary pressures and rising interest rates, and rapid shifts in APRA's operating environment.
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