Agency Budget Statements

Australian Prudential Regulation Authority

Section 1: Overview

The role of the Australian Prudential Regulation Authority (APRA) is developing and enforcing regulation that promotes prudent behaviour by authorised deposit-taking institutions, insurance companies, superannuation funds and other financial institutions with the key aim of protecting the interests of their depositors, policy holders and members.

Prudential regulation focuses on the quality of an institution’s systems for identifying, measuring and managing the various risks in its business.

In carrying out this role, APRA will enhance public confidence in Australia’s financial institutions through a framework of prudential regulation, which balances financial safety and efficiency, competition, contestability and competitive neutrality. This is achieved by:

• the formulation and promulgation of prudential policy and practice to be observed by regulated institutions;
• effective surveillance and compliance programmes and, where relevant, remediation or enforcement measures, to give effect to the laws administered by APRA and to standards issued under those laws; and
• advice to government on the development of regulation and legislation affecting regulated institutions and the financial markets in which they operate.

APRA was established by the Australian Prudential Regulation Authority Act 1998 (APRA Act). The Commonwealth Authorities and Companies Act 1997 currently applies to APRA. From 1 July 2007, the Financial Management and Accountability Act 1997 (FMA Act) will apply to APRA. Details of legislative amendments to the APRA Act and other arrangements necessary to conform to the FMA Act will be determined prior to 1 July 2007.

Table 1.1: Agency outcomes and output groups