APRA’s new “constructively tough” enforcement appetite has been outlined in its recently updated Enforcement Approach, indicating the prudential regulator’s willingness to use its powers more assertively to hold regulated entities and their leaders to account.
APRA’s enforcement actions can range from the imposition of licence conditions and infringement notices, to disqualifications of accountable persons under the Banking Executive Accountability Regime.
“Getting ‘constructively tough’ is not only about taking stronger action earlier where banks, insurers, and super licensees break the law, or fail to behave in an open and cooperative manner with us,” Deputy Chair John Lonsdale said. “It also means setting public examples where it is appropriate to do so and there’s no risk to financial stability. Publicising our enforcement actions not only acts as a general deterrent; it gives the community confidence that financial institutions are being held to account when they do the wrong thing”
Since adopting the new approach, APRA said it has repeatedly demonstrated its stronger enforcement appetite by issuing formal directions and imposing licence conditions on two superannuation licensees and applying additional capital requirements on three major banks and one general insurer in response to risk governance shortcomings.
Lonsdale said potential penalties also await entities that failed to comply with their data reporting obligations.
“As the central statistical agency for Australia’s financial sector, including other regulators, APRA must ensure the data we receive is timely and accurate,” Lonsdale said. “As last month’s fine imposed on Westpac underlined, our reporting standards are legally binding, and we will act when necessary to ensure institutions meet their obligations. Consequently, we have also updated the Enforcement Approach to include guidance on how we will use enforcement action to ensure the data we collect remains fit for purpose.”
