APRA says it is reviewing the thresholds used to distinguish between significant financial institutions and non-significant financial institutions “that benefit from simpler and lower requirements in a range of areas including capital and liquidity.”
APRA’s prudential framework “has a significant level of proportionality, with simpler requirements in some areas for smaller, less complex and less systemically important institutions where it’s safe to do so” John Lonsdale, the APRA chief, told a business conference yesterday.
“We are always looking to balance regulation benefits and costs, as well as transparency. Mindful of community concerns about the level of competition in banking and insurance, we are actively exploring how we can make our framework even more proportionate without harming financial safety.
“We are reluctant to lower the regulatory standards that keep Australia’s financial system resilient and our economy strong, particularly when we see geopolitical risks increasing. But that doesn’t mean we’re closed off to making our prudential framework simpler, less burdensome or more proportionate.
“Unlike deregulation, which can mean lowering standards, this simplification means making regulation easier to understand and implement and less costly and burdensome to comply with.”
APRA, along with the Council of Financial Regulators and the ACCC is well advanced in its review into smaller banks, and Lonsdale’s remarks are a pointer to the tone of its final report to the government, due by 1 July 2025.