The Turnbull Government has today released draft legislation to overhaul the powers of the Australian Prudential Regulation Authority (APRA) during times of financial crisis.
The Government committed to strengthening APRA’s crisis management powers following recommendations from the Financial System Inquiry.
One of the key reasons Australia successfully navigated the Global Financial Crisis was the robust prudential regulation put in place by the Howard Government. However, international experience during the crisis demonstrated that regulators also need powerful, flexible and timely tools to resolve financial institutions in distress.
The prudent time to strengthen crisis powers is when the financial system is healthy.
The Government stands ready to do the heavy lifting required to ensure the wellbeing of the financial system continues into the future.
The draft legislation includes:
- clear powers that enable APRA to set requirements on resolution planning and ensure banks and insurers are better prepared for a crisis; and
- an expanded set of crisis resolution powers that equip APRA to act decisively to facilitate the orderly resolution of a distressed bank or insurer.
The exposure draft legislation and associated explanatory material are available on the Treasury website.
The Government encourages all interested parties to make a submission by Friday 8 September 2017.