The Australian Prudential Regulation Authority (APRA) has finalised new prudential requirements and guidance aimed at strengthening the preparedness of insurers, banks and superannuation funds to respond to a crisis. 
 
APRA says it has finalised Prudential Practice Guide CPG 190 Recovery and Exit Planning, which accompanies prudential standard CPS 190 Recovery and Exit Planning. The regulator had finalised CPS 190 in December last year. 
 
It also finalised CPS 900 Resolution Planning and its accompanying Prudential Practice Guide CPG 900 Resolution Planning. 
 
Chair John Lonsdale says the work is an important milestone in APRA’s strategy to promote the stability of the Australian financial system. 
 
“The Australian financial system is one of the strongest and most resilient in the world, but as we’ve just seen internationally, sometimes crises occur and we need to be prepared,” he said. 
 
“In the unlikely event a bank, insurer or superannuation fund got into difficulty, it would need to ensure it could recover or exit from the market in an orderly manner. 
 
“Where an entity is unable to do this, APRA would take steps to resolve the entity safely in a manner that protects its depositors, policyholders or members.” 
 
He says CPS 190 and CPS 900, and their prudential practice guides, aim to promote the stability of the financial system in times of stress. 
 
“We expect the requirements and guidance for recovery planning to underpin existing expectations for banks and insurers, which have experience in this area,” Mr Lonsdale said. 
 
CPS 190 ensures all APRA-regulated entities have recovery and exit plans for responding to severe financial stress while under CPS 900, large or complex APRA-regulated entities must support APRA in bespoke planning and pre-positioning to ensure that, in the event of failure, they can be resolved in an orderly manner.