The Australian Prudential Regulation Authority (APRA) has said that it will begin issuing new banking, insurance and superannuation licences in phases, and recommence public consultations on select policy reforms.
The announcement comes after the regulator temporarily suspended the issuance of new licences due to the “significant challenges new entrants would have faced due to economic uncertainty” posed by the coronavirus pandemic.
Both APRA and the Australian Securities and Investments Commission (ASIC) also announced at the time that they would defer several major projects to focus on the impact of the coronavirus.
APRA chair Wayne Byres said that while this work was suspended for six months, it was now “appropriate” to provide concerned parties with “greater certainty about critical elements of prudential policy and the provision of new licences”.
“In January this year, APRA published an ambitious policy agenda, [but] the onset of COVID-19 necessitated the suspension of many of APRA’s policy and supervision priorities until end-September,” Mr Byres said.
“This enabled regulated entities to allocate time and resources to manage their own operational challenges in response to the crisis, as well as supporting their customers through this period of significant economic uncertainty. It also allowed APRA to redeploy its resources to monitoring and responding to the impact of the rapidly changing environment.
“In the case of licensing, we considered it appropriate to suspend the issuance of licences in light of the high level of uncertainty created by COVID-19, which would have created especially acute challenges for new entrants.
“We now believe we can restart both policy consultations and licensing activity,” Mr Byres said.
According to APRA, its recommencement of assessing and issuing new banking, insurance and superannuation licences will occur in two phases, with phase one starting in September 2020 and phase two in March 2021.
New licences issued during phase one will be issued to applicants that are branches or subsidiaries of foreign entities with significant financial resources and a strong operational track record in a similar business, APRA said.
The prudential regulator will also accept new licence applications from any entity from September 2020.
From March 2021, APRA believes new licences may be issued to any entity that meets the relevant prudential requirements.
APRA said it is also reviewing the pathways to an authorised deposit-taking institution (ADI) licence, including the restricted ADI licensing framework that was launched in 2018, to include experiences to date while continuing to support competition in the sector.
Furthermore, APRA also stated that it will recommence certain policy reforms in 2020 through a process of public consultations, including ADI capital reforms incorporating APRA’s framework.
“However, it is neither possible nor desirable to pursue our full policy agenda for the time being,” Mr Byres said.
“APRA therefore intends to narrow its policy activities in the remainder of this year to a small number of high-priority prudential policy reforms.”
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Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.