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Risk chiefs under the gun
THE AUSTRALIAN Prudential Regulation Authority’s (APRA’s) new prudential standards will place staff responsible for risk management directly in the regulatory firing line.APRA released its new…
Lawyers Weekly
THE AUSTRALIAN Prudential Regulation Authority’s (APRA’s) new prudential standards will place staff responsible for risk management directly in the regulatory firing line.
“The community expects that persons occupying responsible positions in regulated institutions have the appropriate skills, experience and knowledge for their roles, and act with honesty and integrity,” Laker said. “APRA’s new prudential standards will strengthen protection for depositors and policyholders against the risks of incompetence, mismanagement and fraud and will, more generally, help to underpin public confidence in regulated institutions.”
APRA defines responsible persons as “those persons whose conduct is most likely to have a significant impact on its sound and prudent management”. As risk management has become an increasingly important part of financial services, key risk staff will be included.
According to the standard, those caught in the net are “managers reporting directly to the Chief Executive Officer and those responsible for key aspects of risk management”.
From 1 October this year, regulated institutions must have their own policies to ensure that responsible persons are fit and proper. This must be assessed ahead of the initial appointment and reassessed annually. Some auditors and actuaries must meet additional criteria.
While there have been murmurs of discontent from industry over the reforms, APRA will not be vetting appointments and will use sparingly its power to remove people it does not consider fit and proper. “APRA will not be vetting appointments and we see our powers as reserve powers — to be used when an institution is unable or unwilling to take action itself,” Dr Laker said.
