APRA unveils enforcement strategy review terms of reference

The Australian Prudential Regulation Authority (APRA) has announced the terms of reference for a review of its enforcement strategy.

The review will be led by APRA deputy chair John Lonsdale, who will be assisted by an independent advisory panel of experts in the administration of law and regulatory enforcement, the prudential regulator said.

Lonsdale said the review will examine APRA’s current enforcement strategy and infrastructure, and how it interacts with APRA’s core supervisory approach.

“The review will be a forward-looking examination of APRA’s approach to the use of its enforcement powers to ensure that financial promises made by supervised institutions are met within a stable, efficient and competitive financial system,” he said.

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“APRA has taken a range of supervisory actions over many years, but it is timely to examine whether APRA’s traditional approach - prioritising prevention and rectification - can be augmented by greater enforcement activity.

“This review presents an opportunity for APRA to strengthen further its supervisory toolkit and reinforce sound prudential outcomes.”

APRA said it had established the enforcement review in recognition both of new regulatory responsibilities under the Banking Executive Accounting Regime (BEAR), as well as case studies examined by the Royal Commission.

The final review will be presented to APRA Members by 31 March 2019. Following consideration of the review’s recommendations, APRA said it expects to release publicly both the final review and its enforcement strategy.

APRA said the review will make recommendations on:

a) the breadth of issues APRA seeks to address through public and non-public enforcement action;

b) the considerations in determining when APRA should take enforcement action to hold entities and individuals to account, including under the BEAR and other powers;

c) the considerations in determining whether and when it may be appropriate for APRA to take public enforcement action, including litigation, to achieve general deterrence effects in appropriate cases; and

d) APRA’s internal governance, organisation, enforcement strategy, resourcing and any other factors relevant to APRA’s enforcement function.