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APRA suspends licensing
The Australian Prudential Regulation Authority (APRA) has suspended all new licensing.
The regulator has used a letter to banks, insurers and superannuation funds to inform them of the decision stating “the global COVID-19 virus has led to a fundamental change in the economic and social environment in Australia and globally”.
“In this current environment, APRA will temporarily suspend the issuance of new APRA licences, except in the rare case that the granting of a licence is necessary for APRA to carry out its mandate,” the letter said.
“Financial institutions, particularly those that take customer deposits, look after superannuation funds or issue insurance, occupy a unique position of trust. The financial safety of these institutions is key to the financial stability and well-being of the community and, as a result, these institutions are subject to higher standards than many sectors of the economy. This includes higher entry standards. The process of granting an APRA licence is intended to help ensure that a new entrant will be able to honour the financial promises it makes under all reasonable circumstances.”
The letter said experience had shown that it was challenging for new entrants to succeed even under normal economic conditions, “which is why APRA does not consider it prudent to license APRA-regulated entities at this time”.
“As the operating environment stabilises, APRA will keep its approach under review and advise current applicants when the granting of licences will restart. However, APRA expects this temporary hold could last at least six months and delay APRA licences by at least this timeframe. During this time, APRA will continue to assess current licence applications so the delay on launching when the hold is lifted is minimised,” it said.
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Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
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