APRA drops 2020 priorities to focus on COVID-19

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The Australian Prudential Regulation Authority has announced it has suspended the majority of its planned policy and supervision initiatives in response to the impact of COVID-19.

APRA said its primary supervision focus will shift to monitoring the impact of COVID-19 on the financial and operational capacity of regulated institutions.

It said, "APRA’s refocused supervision effort will involve frequent communication with entities, monitoring key financial settings, such as capital and liquidity, and responding accordingly. These engagements will be conducted virtually, unless absolutely necessary, and will continue as long as necessary."

APRA said the decision is intended to allow the entities it regulates to dedicate time and resources to maintaining their operations and supporting customers. In addition, APRA said it will enable it to "intensify" its focus on monitoring and responding to the impact of a "rapidly changing environment" on the financial and operational capacity of the entities it regulates.

It said it has suspended all substantive public consultations and actions to finalise revisions to the prudential framework that are currently underway or upcoming, including consultations on prudential and reporting standards.

"It will keep the situation under review, but presently does not plan to recommence consultation on any non-essential matters before 30 September 2020," said APRA in a statement.

"APRA may continue to progress certain data reporting initiatives where they are critical to meeting its mandate in the current environment, including new data collections related to the impacts of COVID-19."

It said it is also reconsidering the implementation dates and transition timeframes for prudential and reporting standards that have been recently finalised but not yet implemented. 

APRA announced its 2020 priorities in January. They included continuing work on strengthening the capital framework for private health insurers. APRA has also been outspoken in calling on private health insurers to be pro-active in responding to the decline in membership and enduring concerns over affordability.

APRA Chair Wayne Byres said it was essential that both APRA and financial institutions were able to give their fullest attention to the impact of COVID-19.

“Australia’s financial system is strong and resilient, and a key reason is that APRA’s current prudential framework is fundamentally sound and incorporates international best practice.

“APRA set out an expansive policy and supervision agenda in January, but right now it is more important that banks, insurers and superannuation trustees – as well as APRA – devote their energy and resources to responding to the impact of COVID-19.

“We will be working with financial institutions to balance the need for timely data and information on current conditions with institutions’ ability to effectively manage their own response. Given the rapidly evolving environment in which everyone is operating, we will continue to closely monitor the extent and impact of COVID-19 on APRA-regulated entities to consider if any further modifications to our supervisory and policy activities are necessary,” said Mr Byres.