The Australian Prudential Regulation Authority (APRA) has put financial services firms on notice with its plans for scaling up a tougher approach towards governance, culture, remuneration and accountability.

The more intensive focus outlined in an information paper released last week responds to Hayne royal commission recommendations and will mean more transparent scrutiny of companies and a greater likelihood the regulator will intervene more forcefully when necessary.

“Australia’s banks, insurers and superannuation licensees are financially sound and resilient, but a strong balance sheet alone is not enough for institutions to remain in good prudential health,” APRA Deputy Chairman John Lonsdale said.

Remediation costs relating to issues identified in the royal commission have cost institutions more than $7 billion to date and are likely to rise as further new and historical issues come to light, the regulator estimates.

“Although governance, culture remuneration and accountability are often termed ‘non-financial risks’, a failure to address weaknesses in these areas can cause major financial losses through reputation damage, fines and expensive remediation programs,” Mr Lonsdale said.

APRA says it is strengthening prudential requirements, will incorporate wider use of company self-assessments and will work closely with the Australian Securities and Investments Commission.

Results and findings from various assessments, thematic reviews and APRA “deep-dives” will also be published to the extent possible.

“We believe that using transparency to increase scrutiny and accountability will help ensure GCRA is a higher priority for boards and management and make it more likely they will act to identify and address weaknesses at an early stage,” Mr Lonsdale said.