THE Australian Prudential Regulation Authority used the release of its annual report last week to highlight the stricter regime it is imposing on financial institutions.
APRA has been on the back foot ever since the collapse of HIH Insurance and ‘approved trustee’ company Commercial Nominees, amid criticism that it was too slow to act.
It has instituted new policies to try and ensure this problem does not recur.
As well as improving its early warning systems, which alert it to potential problems, APRA has introduced formal processes to ensure senior staff and “all appropriate resources” are brought to bear in relation to high-risk institutions.
CEO Graeme Thompson said a milestone last year was the new supervision regime for general insurers, which involved a fresh assessment of the strength of all insurers against higher prudential standards.
APRA said supervision of financial institutions was “significantly intensified” during the year, with a particular focus on superannuation funds.
It substantially increased the number of off-site reviews, with a total of 1,498 visits, consultations and reviews undertaken during the year.
The number of enforcement actions doubled to 199. This includes the power to gather information, investigate and issue directions.
APRA also appears to have responded to the criticism that it has failed to publicly warn of looming problems.
Over the past few months it has publicly warned banks and other lenders to be more cautious with their property lending. It has also warned that both large and small superannuation funds could potentially run into problems.
Last week APRA issued a public reminder to trustees of superannuation funds to ensure they lodge an annual return on time. For funds with a June 30 balance date, the deadline is October 31.
At the time of the announcement, approximately 57 per cent of trustees had yet to post their returns.
APRA has already used its powers to successfully prosecute a number of superannuation trustees for non-lodgement in prior years, and has warned that similar action may be taken this year.
