Who would have thought it? The prudential regulator itself is facing more stringent regulation with the passing of new legislation effective from July next year.

The Australian Prudential Regulation Authority (APRA) used to be covered by the Commonwealth Authorities and Companies Act, but the new Financial Management Accountability (FMA) Act which will govern its activities is thought to be more stringent.

The FMA Act covers the role and functions of APRA’s CEO and its procurement, meaning the organisation will have stricter guidelines for budget allocation. It will also require APRA management to report direct to the Finance Minister and Federal Treasurer.

APRA will have to abide by the legislation after a Federal Government review was conducted to improve the performance and accountability frameworks of statutory authorities.

The review was conducted in 2002 by John Uhrig, who was appointed by the Government.

An APRA spokesman told Sunrise Exchange News that adhering to the FMA Act will have only a minor effect.

“Expected changes relate to processes relating to budget allocation, procurement and other internal administrative functions,” he said. “APRA has already changed governance arrangements following the Uhrig review. We expect no material change to our operation as a result of this new arrangement.”

There’s been speculation the review will affect APRA salaries, which are believed to be higher on average than for many equivalent public service positions.

But the spokesman says there is no impact on salaries. “APRA has its own employment powers under the APRA Act and is not subject to the Public Service Act as some agencies are.”

High staff turnover at the regulator has been a talking point, and the new legislation is seen by some as a way of controlling it. However, the APRA spokesman rejects the notion.

He says APRA’s rate of 18% (15% for operational divisions) compares to the Australian finance and insurance industry average of 19.6% provided by Mercer HR Consulting in October last year.