APRA plans to implement Hayne Final Report
APRA has responded to some specific recommendations by Commissioner Hayne in his Royal Commission’s Final Report:
The Royal Commission has recommended a strengthening of APRA’s prudential and supervisory framework in a number of areas. APRA is committed to implementing the recommendations expeditiously.
There are 10 recommendations requiring APRA’s direct attention. Of the 10, it is expected that nine will be completed by the end of 2020; of those, four are expected to be completed in 2019.
A link to a table outlining APRA’s plans to adopt specific recommendations contained in the Final Report of the Royal Commission can be found here.
Some of the key aspirations noted in the table are:
- Imposing new requirements for accountability under the BEAR for product management and customer remediation. Proposed requirements will be released in the second quarter of 2019, with a view to finalising a requirement by end 2019
- Proposing revisions to Prudential Standard CPS 510 by mid-2019 to give effect to the Principles, standards and guidance set out in the Financial Stability Board’s publications concerning sound compensation principles and practices
- Developing the capacity to supervise governance, culture and remuneration in light of lessons from its supervisory activities
- Implementing lessons from its supervisory activities, CBA Prudential Inquiry and associated self-assessments by other entities and its 2017-18 review of remuneration practices at large financial institutions
- Applying BEAR accountability obligations to APRA’s management structure including developing and publishing accountability statements
APRA notes that is also examining each of 12 matters relating to individual financial services entities that were referred to it by the Royal Commission. These cases are being examined in parallel with APRA’s broader Enforcement Review conducted by APRA Deputy Chair John Lonsdale and supported by APRA staff and an external expert panel (see CN 2018.206).
Samuel Capability Review Underway
While APRA undertakes its Enforcement Review under the direction of John Lonsdale, the Federal Government has appointed former competition regulator Graeme Samuel to conduct a separate capability review of the prudential regulator, commencing in March. That review is in line with recommendations by the Hayne Final Report that “a capability review should be undertaken for APRA as soon as is reasonably practicable.”
The Samuel Capability Review will report to the government by June this year. Its panel will examine APRA’s capability to regulate superannuation entities for the benefit of members, the role of enforcement activities and coercive powers and the supervision of culture, governance and remuneration in regulated institutions.
It will be interesting to observe whether there are significant divergences between APRA’s self-assessment under Lonsdale and the findings of the Samuel Capability Review panel, concerning APRA’s culture and enforcement strategy. Some of the key questions will centre around issues of when to hold individuals to account, when it would be appropriate to take enforcement action to achieve deterrence in appropriate cases, and the application of the BEAR to APRA’s own governance and accountability for its enforcement decisions.
GRC Solutions is an award-winning provider of compliance training. To find out more about our online BEAR training course which details what your business and your accountable persons need to do and to know in order to comply with their BEAR obligations, contact us today.
We also offer facilitated training for Boards on BEAR, and Responsible Managers training for ACL and AFSL licensees.