APRA has moved quickly to reprioritise its policies and direct resource towards promoting financial system stability in response to the economic disruption caused by the COVID-19 pandemic. This includes a number of new regulatory reporting requirements for ADIs and RFCs. The increased reporting burden placed on entities has temporarily been offset by the delayed implementation of several new standards.
In this blog we take stock of APRA’s recent banking announcements and outline what these changes mean for domestic risk and regulatory reporting teams. For a deeper dive into domestic regulatory announcements over the past few months, including IFRS 9 accounting considerations during times of increased financial volatility, see our webinar on APRA’s response to COVID-19.
APRA outlined its supervision and policy priorities in January 2020, unveiling a 12-18 month forward plan which was tailored to fulfilling its strategic goals. Fast forward two months and in March 2020 APRA announced it was suspending the majority of its planned policy and supervision initiatives in response to the impact of COVID-19. The timeline below summaries other key announcements.
APRA’s decision to revise banking capital expectations and encourage lenders to take advantage of the RBA’s TFF was met with resounding agreement. Other decisions such as suspending the issuance of new banking licences for at least 6 months was viewed as a blow to innovation and Fintechs, leading to fresh concerns about market consolidation. Meanwhile the reporting burden on banks continues to mount as more agencies turn to APRA for support on COVID-19 monitoring activities.
Key reporting announcements
Those working in the risk and regulatory space at banks would be excused for not being accustomed to the speed of APRA’s recent regulatory announcements. As we detailed in our webinar on the SME Guarantee Scheme collection, APRA has taken a variety of measured short-cuts to accelerate the implementation of reporting and collection initiatives.
Changes to regulatory reporting requirements leads to more time spent on data sourcing, analysing and validation activities at banks. Moreover, recent changes by APRA rely on banks having robust existing reporting processes which leverage off the EFS collection. The table below summarises additional banking reporting requirements to date, presenting them by regulatory instrument.
Additional reporting requirements
Extensions to parallel reporting periods and the new SME Guarantee Scheme collection, under ARS 920.0, are intended to support the agencies and other Federal Government departments better monitor the impact of COVID-19 on the economy. Other announcements, summarised in the table below, relate to changes to APRA’s supervision and regulation activities.
Extensions to implementation dates
APRA’s announcements are intended to allow banks to dedicate more time and resource to maintaining their operations and supporting customers in response to the COVID-19 pandemic. Capital adequacy extensions are consistent with the decision from the Basel Committee on Banking Supervision (BCBS) to defer the internationally agreed start dates for Basel III standards (often referred to as Basel IV).
Recently APRA suspended the majority of its planned policy and supervision initiatives in response to COVID-19. The regulator made this decision and a number of changes to its 2020 agenda to intensify its focus on monitoring and responding to the impact of the rapidly changing environment on entities’ financial and operational capacities. Other regulatory announcements, summarised in the table below, relate to changes in APRA’s supervision priorities.
Other key supervision announcements
Banks will need to ensure their processes for identifying COVID-19 support packages adequately support loan deferral and provisioning reporting treatments across all APRA collections. APRA will continue to revise its regulatory pipeline and supervision focus in the coming months as the impact of the pandemic on the Australian financial system becomes more certain. However, one concession banks will not receive is relief from their timely and accurate data reporting commitments to APRA.
To learn more about how RegCentric can help your firm meet its regulatory and compliance obligations, contact us here.