APRA moves to cut regulatory burden

The Australian Prudential Regulation Authority (APRA) is seeking to reduce unnecessary regulatory burden while maintaining prudential standards designed to support productivity and long-term financial stability.

The regulator has outlined its approach on its strategic objective of "getting the balance right" between effective regulation and the needs of the financial system.

The latest article details APRA's work to simplify prudential requirements, improve proportionality and reduce duplication across its regulatory framework.

APRA member Suzanne Smith said the regulator had made progress in making its requirements more targeted and efficient, while maintaining the standards needed to support a stable financial system.

The article outlines further work APRA intends to undertake as it continues to refine its prudential framework, with a focus on ensuring regulation is proportionate to the risk's faced by different entities.

APRA said the approach is intended to reduce regulatory requirements that do not materially contribute to prudential outcomes, while ensuring firms continue to meet appropriate standards of financial resilience and risk management.

The regulator's focus on regulatory efficiency comes as financial institutions continue to face a complex operating environment, with regulatory requirements spanning banking, insurance and superannuation.

APRA said its work is aimed at ensuring the prudential framework remains effective without imposing unnecessary costs or complexity on regulated entities.

Smith set out the regulator's progress to date, as well as the next steps towards a more targeted, proportionate and efficient framework.

"When APRA talks about reducing unnecessary regulatory burden, we do not mean lowering standards," said Smith.

"Our goal is to make sure regulation is targeted, proportionate and effective, so banks, insurers and superannuation funds remain safe and resilient without adding unnecessary cost or complexity."

The regulator said getting a balance right will remain an ongoing focus as it considers how prudential regulation can support productivity while maintaining financial stability.

The regulator said it is working to improve data sharing with other government agencies, with 30% more data shared with external stakeholders over the past 12 months aimed at reducing duplicate requests to industry. APRA said eight of the nine initiatives announced in its previous Corporate Plan are expected to be finalised by the end of 2026, with further work underway to simplify requirements and reduce the cumulative burden facing regulated entities.