Mackay Chapman November 2024 APRA Update

In this month’s APRA update:

• APRA publishes 2023-24 Annual Report;
• International Bank of Australia’s restricted banking licence revoked;
• APRA increases transparency of super fund expenses; and
• Operational risk financial requirements amended for superannuation trustees.

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APRA Publishes 2023-24 Annual Report

APRA has released its Annual Report for the 2023-24 financial year, which is available on its website at APRA Annual Reports. An accessible version of the report will be provided soon.

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International Bank of Australia’s Restricted Banking Licence Revoked

APRA has agreed to requests from the International Bank of Australia Pty Limited to revoke its restricted banking licence, as well as from IBOA Group Holdings Pty Ltd to revoke its non-operating holding company licence.

Both licences were granted in November 2022, but the bank had not launched any products, had no customers, and had zero deposits at the time of revocation. 

This decision does not affect the bank's ability to apply for an ADI or restricted ADI licence in the future. 

Updated lists of APRA-authorised ADIs and non-operating holding companies are available on the APRA website at Register of authorised deposit-taking institutions and Register of non-operating holding companies.

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APRA Increases Transparency of Super Fund Expenses

APRA has released its inaugural publication of fund-level expenditure data, covering various categories including investment-related expenses, administration costs, advertising, sponsorship, and payments to industrial bodies. 

This initiative is part of APRA’s intensified supervision of superannuation fund expenditures.

The data for the financial year 2022-23 is available as supplementary tables in the Annual Fund Level Superannuation Statistics and the Annual Superannuation Bulletin. 

APRA plans to publish this fund-level expenditure data annually, with the next release for the financial year 2023-24 scheduled for early 2025.

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Operational Risk Financial Requirements Amended for Superannuation Trustees

APRA has amended the prudential requirements related to operational risk financial requirements (ORFR) for superannuation trustees under Prudential Standard SPS 114. 

These changes aim to enhance operational resilience by ensuring trustees can access financial resources for ORFR more effectively and maintain appropriate reserving levels.

Key amendments include:

• Clarification of the ORFR's purpose;
• Expansion of allowable uses for the ORFR;
• Establishing a clear relationship with Prudential Standard CPS 230 on operational risk management; and
• Adjustments to APRA's notification requirements to facilitate the ORFR's use.

To ease regulatory burdens, APRA has simplified its guidance on setting the minimum ORFR target amount. The amended SPS 114 will take effect from 1 July 2025. Further details and documents are available on the APRA website.

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The contents of this article do not constitute legal advice and it is not intended to be a substitute for legal advice and should not be relied upon as such.  It is designed and intended as general information in summary form, current at the time of publication, for general informational purposes only.  You should seek legal advice or other professional advice in relation to any particular legal matters you or your organisation may have.