The Australian Prudential Regulation Authority is to receive new powers to investigate institutions, compel compliance and rectify breaches of prudential requirements.The Minister for Financial Services, Chris Bowen, yesterday released the Financial Sector Legislation Amendment (Prudential Refinements and Other Measures) Bill for public consultation.Among the changes to APRA's correction powers the pre-condition for APRA to issue directions, currently "a sudden material deterioration in the body corporate's financial condition", would be amended to remove the word "sudden" to reflect that it is not the speed but the extent of the deterioration that should be relevant.APRA's power to direct the subsidiaries of a supervised entity and its power to direct a foreign approved deposit-taking institution will be clarified.The regulator's failure-management powers will be increased. Under the Banking Act, APRA may appoint a statutory manager if the intervention is in depositors' interests and would promote the stability of the financial system.The Bill allows APRA to appoint a statutory manager to an ADI if it is in the depositors' interests or for financial stability. According to the explanatory memorandum issued with the Bill yesterday: "In exceptional circumstances, such as the early stages or sector-wide distress, it may be that APRA can only be satisfied of one of these two factors with the result that it may be unable to appoint a statutory manager until further events have unfolded, even if there is a need for immediate intervention."The Bill enables APRA to require a compulsory transfer of business from one general insurer to another, in the same way that it can now transfer business from a distressed financial institution to another.The Bill amends the Banking, Insurance and Life Insurance Acts to enable APRA to direct an ADI, general insurer or life insurer to recapitalise in circumstances equivalent to that which would presently allow APRA to appoint a statutory manager. Failure to comply would be a criminal offence.Among the changes to APRA's investigative powers the Bill clarifies its right to continue an investigation after a regulated entity enters external administration.The Bill provides that a person is not entitled to fail to comply with a requirement to answer questions or give information on the grounds that to do so would make the person liable to a penalty.The Bill also expands APRA's data collection powers.Bowen said in a statement that the enhancements to APRA's powers were consistent with developments overseas. The Government is taking submissions on the Bill and has set a deadline of March 16.