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APRA's enforcement approach 1.33 MB

APRA’s mandate is to protect the Australian community by establishing and enforcing prudential standards and practices designed to ensure that, under all reasonable circumstances, financial promises made by institutions it supervises are met within a stable, efficient and competitive financial system. APRA also acts as a central statistical agency for the Australian financial sector, plays a role in preserving the integrity of Australia’s retirement incomes policy and administers the Financial Claims Scheme.

APRA is a forward-looking regulator that seeks to identify prudential risks proactively and take action to prevent harm before it occurs. APRA’s remit involves regulating financial entities in accordance with the prudential laws of the Commonwealth, setting prudential standards for those entities, monitoring compliance with those laws and standards through day-to-day supervision, and intervening early to resolve issues.

In seeking to deliver on its mandate, APRA has a range of formal and non-formal tools available. Non-formal approaches include supervisory methods and tools such as prudential and thematic reviews, financial analysis, heightened engagement and reporting requirements. APRA also has a broad range of formal enforcement powers that it can use to deliver its mandate. Enforcement in this context is not limited to taking court-based action, rather it refers to the use of APRA’s range of formal powers – such as powers to direct entities to take or cease particular actions, or impose license conditions on the way in which a business must operate.

Much of APRA’s work is achieved through using non-formal approaches and working cooperatively with entities to identify and rectify problems before they threaten the ability of an entity to meet its financial promises. However, APRA is prepared to take enforcement action to deliver its prudential mandate when appropriate, including where non-formal approaches are not delivering satisfactory outcomes due to a lack of cooperation from an entity or individual.

This means that APRA will be prepared to use enforcement to prevent and address serious prudential risks and to hold entities and individuals to account. APRA may do this well before the risks (whether financial, operational or behavioural4 ) present an imminent threat to financial viability. Where entities or individuals are failing to meet prudential obligations, APRA will act quickly and forcefully, and be willing to set public examples to deter unacceptable practices from occurring in the future.

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