The Australian Prudential Regulation Authority has finalised amendments to the definition of a significant financial institution that it uses in its prudential framework.

APRA released a draft of an “aligned and centralised” definition in April and invited submissions. Yesterday it wrote to regulated entities saying it was finalising the amendment without revision.

Over the years, the regulator has introduced greater proportionality into the prudential framework, subjecting smaller and less complex entities to simpler requirements and significant financial institutions to higher requirements.

This was evident in recent amendments to the remuneration standard. Under the standard, non-SFIs do not have to meet minimum deferral, clawback or review requirements.

The changes ensure consistency across standards, so that all prudential standards will use the same definition of an SFI, and “establish a platform for broader application of proportionality with the prudential framework over the long term”.

Under the centralised definition, the following entities are classified as SFIs: an ADI with assets in excess of A$40 billion; a general insurer or life company with assets in excess of $10 billion; a private health insurer with assets in excess of $3 billion; and a responsible superannuation entity with assets in excess of $30 billion.

Other entities may also be classified as SFIs by APRA, having regard to matters such as the complexity of its operations or its membership of a group.