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Financial services industry laments APRA’s cost burden

By Reporter
2 minute read

Less than a third of APRA-regulated entities are satisfied with the prudential regulator’s management of compliance burdens.

The Australian Prudential Regulation Authority (APRA) has published its 2023 Stakeholder Survey, which sought feedback from 282 entities from across the banking, insurance, and superannuation industries.

The survey found just 27 per cent of entities believe changes to APRA’s prudential framework have “sufficiently considered the costs of regulation”.

The lowest reading was among firms from the superannuation industry, with just 6 per cent satisfied with the regulator’s consideration of cost burdens.

“APRA also noted less positive responses from superannuation entities following several years of heightened scrutiny and tougher requirements aimed at boosting member outcomes,” the regulator reflected.

The strongest reading, albeit relatively weak, was from authorised deposit-taking institutions (36 per cent).

More broadly, however, 98 per cent of respondents believe APRA’s supervision has benefited their industry, up from 95 per cent in the previous survey published in 2021.

Further, 94 per cent said APRA’s oversight helps protect financial wellbeing, while 90 per cent said APRA’s supervision enhances the firm’s financial and operational strength.

When compared to previous surveys, fewer entities believe APRA effectively pursues financial safety, “balanced with considerations of efficiency, competition, contestability and competitive neutrality, and promotes financial stability”, down from 81 per cent in 2021 to 66 per cent.

“As a statutory authority, APRA is accountable to the parliament and Australian people, however we also welcome confirmation that the banks, insurers and superannuation licensees we supervise continue to endorse the work we do to uphold their prudential soundness and overall financial system stability,” chair John Lonsdale said.

“Recent bank collapses in the US and Europe, and the ongoing spate of serious cyber-attacks, underscore the importance of our prudential framework continuing to evolve in response to new and accelerating risks.

“However, we also hear the message that industry would like us to better balance the positive impact of supervision with the cost and burden of regulation. APRA will reflect on all the survey findings as we shape our future policy and supervision agenda.”