APRA's first capability review should consider benchmarking it against comparable prudential regulators around the globe, says its terms of reference which are now open for response.
Last month, the Government agreed to undertake regular capability reviews of APRA starting in 2019. This came on the back of recommendations made by both the Royal Commission and the Productivity Commission.
The first APRA capability review has now commenced, with a three-person panel appointed by Federal Treasurer Josh Frydenberg.
The Treasury is seeking responses on the consultation for the next 26 days, through April 10.
The terms of reference state the panel should treat recent reviews and reports into APRA as its starting point.
It names five reports: the Royal Commission's final report, the Productivity Commission's final report on superannuation and competition in the Australian financial system, IMF's Financial Stability Assessment of Australia and APRA's own internal enforcement review.
"The panel should to the extent relevant take into account practices of, and benchmark APRA against, comparable international prudential regulators," the terms of reference said.
"In undertaking its assessment, the panel should take as given APRA's legislative framework, except as outlined [below] in relation to APRA's statutory powers," it said.
As part of its work the panel should evaluate the extent to which the following factors support APRA to deliver its statutory mandate:
- Well considered and clear strategy that takes into account the future operating environment effectively cascaded throughout the organisation;
- Decision-making that balances financial safety and financial stability, and considerations of efficiency, competition, contestability and competitive neutrality;
- Culture that supports supervisory and enforcement actions in support of strategic objectives;
- Robust internal governance arrangements, supported by fit-for-purpose internal reporting, performance monitoring and audit and assurance activities;
- Appropriate resource allocation, responsiveness to emerging issues, and efficient utilisation;
- Staff with necessary expertise (e.g. industry, technical and data analytics) supported by appropriate tools;
- Sound process and outcomes realised across APRA's core supervision, policy and resolution functions (including appropriate utilisation of enforcement tools);
- Appropriate engagement with Australian financial sector regulators, including suitable information sharing arrangements; and
- Fit-for-purpose statutory powers.
Read more: March 1, APRA sets sights on 2019 targets.