APRA completes program to modernise the prudential architecture

The Australian Prudential Regulation Authority (APRA) has delivered its multi-year project to modernise the prudential architecture (MPA), with the publication of the final version of its new digital Prudential Handbook.

The MPA initiative was launched in 2021 with the goal of making APRA’s regulatory framework for banks, insurers, and superannuation trustees clearer to understand, simpler to navigate, and more adaptable to ongoing changes in the operating environment. 

Since its commencement, the MPA program has delivered changes to the design and presentation of APRA’s prudential framework to enable:

• better regulation – improving the design of the framework, which is now structured in clear pillars, and rationalising and consolidating standards and guidance where it makes sense to do so;
• a ‘digital first’ approach – using technology to make it easier to access and manage the standards, guidance and supporting policy information; and
• new risks, new rules – responding in an adaptable and agile way to emerging risks in a manner that integrates with – rather than adds to – the existing framework.

The new Prudential Handbook, which was released in beta version last month, brings together all of APRA’s prudential standards, prudential practice guides and relevant supporting information into one place. The digital format ensures the Prudential Handbook can be easily navigated, and caters to a range of different users across regulated industries and in the broader community.

APRA Chair John Lonsdale acknowledged the contribution of industry voices in helping to shape the overall MPA initiative.

“Since APRA’s creation in 1998, the prudential framework has grown substantially in response to new risks and changes in the operating environment. While this has been necessary to continue to protect the community, we also recognised that the framework had become complex, difficult to understand and both costly and burdensome to comply with.” 

“Over the past three years, we have responded with a range of measures designed to maintain the resilience of the entities we regulate while easing compliance burden and strengthening our own approach to regulating risks. Significant input from entities and the RegTech sector over this period played an important role in directing our priorities and keeping the MPA initiative heading in the right direction.”

“Having now delivered the foundation piece for a modern prudential architecture, we will continue to look for opportunities to sharpen and simplify the prudential framework, and we welcome further feedback and suggestions from industry, especially in relation to the new Handbook,” Mr Lonsdale said.

The final Handbook can be explored at: APRA Prudential Handbook | Prudential Handbook.

For an overview of the Handbook, please click on the video below.