The Australian Prudential Regulation Authority (APRA) has released the first edition of its revamped ‘Insight’ resource, moving away from the “highly technical” focus of the past to communication intended for a wider audience in an attempt to promote transparency.
APRA chair Wayne Byres explained, “APRA‘s responsibilities and approach to regulation and supervision are not always well understood.
“There are a variety of reasons for this, such as the highly complex nature of prudential supervision, as well as constraints on disclosing many of our decisions and actions.
“We have intentionally overhauled the structure of Insight to make the contents relevant and accessible to a much broader audience. Our goal is to help the public and interested stakeholders to gain a clearer understanding of what we do and why we do it.”
In the first edition distributed yesterday, the regulator provided updates on a number of topics.
BEAR Regime
On 1 July, the Banking Executive Accountability Regime (BEAR) expanded from the big four Australian banks to include all small and medium ADIs, bringing an additional 149 banks, credit unions and building societies into the fold. The number of accountable people registered with APRA jumped from under 100 to over 1,400.
BEAR is intended to hold executives in ADIs accountable for their actions through outlining clear behavioural expectations to which people can be held, as well as better distinguishing which individuals are responsible for which decisions.
While the small and medium ADIs are required to meet the same obligations as larger banks, the maximum penalty that can be imposed if an ADI breaches its obligations depends on the size of the institution in question.
“The result should be better outcomes in the long-term for the ADIs, their shareholders and their customers,” APRA concluded.
Data Modernisation
The regulator also clarified its new strategy for how to better utilise data and analytics to enhance its supervision.
“Like the companies we regulate, APRA cannot afford to fall behind the technological curve,” it noted.
The regulator hopes to move away from its reliance on outdated legacy systems to improve efficiency and reduce the resources required to handle data.
To this end, APRA is partnering with ASIC on data collection topics of joint interest, including ASIC’s data collection of loan level information on residential mortgages.
While the rise of data analytics has seen an explosion in the financial sector and beyond, the trend is “only in its infancy.”
“Whether you’re a regulator, a business, or an investor, making sound financial decisions requires timely, reliable and detailed information,” stated the regulator.
