APRA heat map update in doubt

APRA's June update to the MySuper heat map is in question, as the prudential regulator suspends the majority of its supervisory and policy initiatives to zero in on the health of its regulated entities amid COVID-19.

The prudential regulator has put the majority of its 2020 agenda on ice until the end of September, to support its regulated entities to maintain their operations and support customers in the face of the pandemic.

APRA said the decision would allow it to "intensify" its focus on monitoring and responding to the impact of a rapidly changing environment on entities' financial and operational capacity.

As a result, an APRA spokesperson confirmed to Financial Standard the regulator's recently confirmed June update of its controversial MySuper heat map was "potentially in doubt".

The June update was set to only include new data for the fees and costs of Australia's MySuper products, and was confirmed by APRA last week.

However, the spokesperson said discussions were still ongoing within the regulator about which projects would be prioritised while it focuses on the health of regulated institutions.

The spokesperson did not confirm whether the December update of the heat map - which is set to include new data across the tool's entire range of fund performance measures - would also be impacted.

APRA said those initiatives which involve "intensive engagement with regulated entities" were the most likely to be paused.

"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.

APRA chair Wayne Byres said it was more important for regulated entities to focus on the current crisis than the next tranche of regulatory work, given the difficult period ahead of the financial services industry, and the work APRA had done so far to ensure the industry's strength and resilience.

"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," Byres said.

"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."

ASIC confirmed it had also recalibrated its regulatory priorities to focus on COVID-19, including its anticipated consultation paper on managed discretionary accounts.

The corporate regulator said the consultation was just one of several near-term, non-time sensitive activities it had temporarily halted to ensure it was focused on the difficulties to be posed by COVID-19 on the firms it regulates.

"By taking these actions, industry participants will be better placed to focus on their immediate priorities and the needs of their customers at this difficult time," ASIC said.

Read our full COVID-19 news coverage and analysis here.

Read more: APRAHeat mapMySuperASICFinancial StandardWayne Byres
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