Australian Prudential Regulation Authority to resume issuing of new licences
APRA’s recommencement of assessing and issuing new banking, insurance and superannuation licences will occur in two phases, with phase one starting in September 2020.
The Australian Prudential Regulation Authority (APRA) announced today it will recommence public consultations on select policy reforms and begin a phased resumption of the issuing of new licenses.
In March, APRA announced the suspension of the majority of its planned policy and supervision initiatives in response to the impact of COVID-19. In April, the issuing of new licences was also suspended due to the significant challenges new entrants would have faced due to economic uncertainty.
APRA Chair Wayne Byres said it was appropriate, having originally suspended these activities for six months, to provide interested parties with greater certainty about critical elements of prudential policy and the provision of new licences.
“However, it is neither possible nor desirable to pursue our full policy agenda for the time being. APRA therefore intends to narrow its policy activities in the remainder of this year to a small number of high-priority prudential policy reforms,” Mr Byres said.
The policy reforms that will be recommenced in 2020 through a process of public consultation are:
- the cross-industry prudential standard for remuneration;
- ADI capital reforms incorporating APRA’s unquestionably strong framework, Basel III and measures to improve transparency, comparability and flexibility;
- insurance capital reforms to incorporate changes in the accounting framework (AASB 17); and
- the prudential standard for insurance in superannuation, and updated guidance on the sole purpose test.
In line with its policy agenda, APRA will also restart consultation on a limited number of its data collections, including the recommencement of its Superannuation Data Transformation project.
APRA’s recommencement of assessing and issuing new banking, insurance and superannuation licences will occur in two phases, with phase one starting in September 2020 and phase two in March 2021.
New licences issued during phase one will be issued to applicants that are branches or subsidiaries of foreign entities with significant financial resources and a strong operational track record in a similar business. APRA will also accept new licence applications from any entity from September 2020.
From March 2021, APRA envisages new licences may be issued to any entity that meets the relevant prudential requirements. APRA is also reviewing the pathways to an ADI licence, including the Restricted ADI licensing framework that was launched in 2018, to incorporate experiences to date, while continuing to support competition in the sector.
