In August, ASIC and APRA both released their Corporate Plans outlining their priorities over the next four years. ASIC has a continuing focus on achieving a “fair, strong and efficient financial system for all Australians” and APRA on “protected today, prepared for tomorrow”. The regulators both say they will continue to work towards achieving these outcomes with a supervision-led approach and using their regulatory powers to enforce compliance, whilst also planning for the longer term to address emerging trends and issues more effectively.

The Corporate Plan drivers

The financial results of Australia’s major financial service businesses in the past year demonstrate that the Australian Financial System is nothing if not resilient. However, the challenges which have crossed our paths in the past year cannot be overlooked. From the effect of COVID-19 to the rise in inflation, cost of living and fast rising interest rates, to natural disasters and geopolitical tensions, overall, Australians have been through a lot and the current environment is shaping the regulatory focus.

Together these events have triggered the regulators to revise and reconstruct their economic outlook for the coming years. Thus, the revised Corporate Plans published by both ASIC and APRA are reflective of the economic and external factors which are acting as forces for change.

In addition, the accelerating rate of technological change in financial services is also influencing where the regulators will be expending effort including:

• New technology focussed financial market entrants, platforms, products, channels and services
• New forms of digital currencies, wallets, stored value and payment methods
• The rise in cyber-security issues
• Emerging data and technologies

Finally, there remains some foundational issues the regulators are focussed on, some a consequence of further law reform and lessons learned from the Financial Services Royal Commission and others reflective of changing standards and expectations of social responsibility impacting the regulatory environment such as:

• Climate risk and ESG
• Aging population
• Vulnerable customers
• Legislative reforms
• Protecting consumers from financial volatility
• Greater consumer demand for transparency

Summary of the key changes

Many of the same themes from ARPA’s 2021-25 Corporate Plan have carried across to the updated 2022-23 plan, primarily around cyber/technological resilience and strengthening governance, risk culture, remuneration and accountability (GCRA). It is unsurprising these are enduring themes. Both the regulators and those they regulate are on a journey particularly in the technology space to transform the way they manage and assess data. In its 2022-26 Corporate Plan, ASIC is looking towards digitally enabled misconduct identification and assessment, and has updated its priorities to include scams and crypto-assets. Similarly, APRA will continue to consult with relevant stakeholders to develop appropriate prudential requirements for crypto-assets activities and stablecoins as previously announced in its risk management expectations and policy roadmap.

Both regulators have a reduced focus on the negative effects of COVID-19. While there is acknowledgement the pandemic impacts still linger, the regulators have responded to emerging trends with new priorities of climate risk/sustainability and retirement strategy. With interest rates rising at their fastest level in a generation there will be increased focus on credit risk and in the event of financial distress and default, the treatment of arrears and vulnerability.

The priorities and shared focus areas

Watch this space!

We will continue to provide insights into the challenges organisations face and explore to pragmatically meet regulatory expectations across the priority areas. Contact us if you would like to learn more about our solutions and how we can help you.