Super funds behind banks and insurers in crisis preparedness

2 December 2021
| By Liam Cormican |
image
image
expand image

The Australian Prudential Regulation Authority (APRA) is consulting on new prudential standards to strengthen the preparedness of banks, insurers and superannuation trustees to respond to future financial crises.

According to APRA’s ‘Strengthening Crisis Preparedness’ discussion paper, the financial contingency readiness of the superannuation industry was “considerably further behind” banks and insurers.

APRA was consulting with banks, insurers and super funds about two proposed financial contingency standard to reduce negative consequences resulting from failure.

The first standard, CPS 190 Financial Contingency Planning, would set out actions that an entity would take in stress to restore financial resilience or exit the industry safely, while protecting depositors, insurance policyholders and superannuation fund members.

The second, CPS 900 Resolution Planning, would require large APRA-regulated entities to take pre-emptive actions to help APRA resolve failures to mitigate adverse financial system impacts.

ASIC deputy chair, John Lonsdale, said the disorderly failure of an APRA-regulated entity could have a significant impact on the economy and society.

“Although Australia has one of the strongest and most stable financial systems in the world, and failures are extremely rare, businesses in any competitive market can face financial difficulties,” Lonsdale said.

“Should that happen, we want to be sure each entity has the capability to either recover, or manage an orderly exit with the smallest possible impact on the community and the financial system.

“APRA-regulated entities have made substantial improvements in contingency planning over recent years, however there remain large gaps in capabilities between entities and across industries.

“By laying out a consistent, transparent and enforceable framework, APRA will be better able to strengthen crisis preparedness and close those gaps.”

Consultation on CPS 190 and CPS 900 would take five months and close on 29 April 2022. APRA proposed the new prudential standards would come into force from the start of 2024, and one year later for superannuation trustees for CPS 190 only.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

10 months 1 week ago
Kevin Gorman

Super director remuneration ...

10 months 2 weeks ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

10 months 2 weeks ago

The profit-to-member super funds are officially operating as a merged entity, set to serve over half a million members. ...

1 day 13 hours ago

Super Review announced 21 winners at the annual Super Fund of the Year Awards, including the recipient of the prestigious Fund of the Year Award....

2 days 4 hours ago

APRA data shows the CFMEU accounted for 28 per cent of super fund industrial contributions, with the shadow treasurer calling for a prompt investigation into the payments...

3 days 8 hours ago