The Australian Prudential Regulation Authority (APRA) will be “less patient” with financial services groups – including insurers – that refuse to co-operate with it.

APRA outlines the new posture in its latest Enforcement Approach guide, after completing an internal review of its prudential oversight.

The guide says it will use the full range of legal powers at its disposal, including court actions and licence conditions, to protect the stability of the financial system.

APRA will activate its legal toolkit when non-formal approaches such as thematic reviews and heightened engagement have failed to encourage co-operation.

“With the release of APRA’s revised Enforcement Approach… the new enforcement appetite comes into effect immediately,” Chairman Wayne Byres said.

“Particularly as our powers have recently been strengthened in a number of areas, the new Enforcement Approach will ensure we make use of those powers as the Parliament intended.

“That means that, in future, APRA will be less patient with the time taken by unco-operative entities to remediate issues, more forceful in expressing specific expectations, and prepared to set examples using public enforcement to achieve general deterrence.”

APRA will act on all seven proposals arising from the internal review, which came after the Hayne royal commission questioned the regulator’s perceived reluctance to use its court-based sanction powers.

The proposals recommend:

• Strengthening co-ordination with the Australian Securities and Investments Commission (ASIC) by developing clear principles for sharing information and taking co-ordinated action on matters of mutual interest.
• Increasing APRA’s enforcement appetite from a “last resort” to a “constructively tough” approach.
• Strengthening APRA’s supervisory-led approach by assigning clear responsibility to supervisory divisions for applying the new enforcement appetite.
• Building a more forceful supervisory culture and approach, emboldened by the tone from the top, to better empower and support supervisors to hold entities and individuals to account, including through enforcement action.
• Establishing an APRA member-led committee to drive enforcement decision-making and strengthen oversight.
• Giving supervisors more enforcement support by creating a combined team of investigation and legal experts, and ensuring adequate funding for APRA’s enforcement actions.
• Bolstering APRA’s statutory powers including: revising and creating additional penalties; enhancing enforcement powers in superannuation and private health insurance; removing barriers to joint investigations with ASIC; and extending the Banking Executive Accountability Regime to other regulated industries.