APRA or Australian Prudential Regulation Authority ("APRA") oversees/regulates banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurance, friendly societies and most members of the superannuation industry. APRA is funded largely by the industries that it supervises. It was established on 1 July 1998.

About APRA

Our mission: to establish and enforce prudential standards and practices designed to ensure that, under all reasonable circumstances, financial promises made by institutions we supervise are met within a stable, efficient and competitive financial system.

HISTORY

In June 1996, the Financial System Inquiry (known as the Wallis Inquiry) was established to examine the results of the deregulation of the Australian financial system, to examine the forces driving further change, particularly technological and recommend changes to the regulatory system to ensure an 'efficient, responsive, competitive and flexible financial system to underpin stronger economic performance, consistent with financial stability, prudence, integrity and fairness.

At the time, the regulators of the Australian financial services industry were based on the institutions and not the regulatory function.

APRA's predecessor regulators were -

Insurance and Superannuation Commission (ISC)
Reserve Bank of Australia; and
Australian Financial Institutions Commission (AFIC).

The Wallis Inquiry recommended a new structure.^[¹^] The Reserve Bank of Australia (RBA) was to deal with monetary policy and systemic stability with the Payments System Board considering payments systems regulation.

The Australian Prudential Regulation Commission (APRA) was to deal with prudential regulation of Authorised Deposit-Taking Institutions (ADIs), life and general insurance and superannuation (including Industry superannuation)

The Corporations and Financial Services Commission (a renamed and expanded Australian Securities & Investments Commission (ASIC) ) was to deal with market integrity, consumer protection and corporations.

APRA was established on 1 July 1998 under the Australian Prudential Regulation Authority Act 1998. APRA became prominent in -

the collapse of HIH Insurance in 2001; and
for its investigation into the National Australia Bank foreign currency deal scandal in 2004.

Below is an extract from an article "APRA take the easy road out with risk culture" in The Conversation on October 19, 2016:

"In fact, APRA does make a case why, as prudential regulator, it should consider risk culture:

“APRA’s focus on risk culture reflects its prudential mandate - that as a result of undesirable behaviours and attitudes towards risk-taking and risk management, the viability of an APRA-regulated financial institution itself might be threatened, and this may in turn jeopardise both the institution’s financial obligations to depositors, policyholders or fund members, and financial stability”.

While ASIC’s primary focus is on illegal actions by individuals (and arguably corporations), APRA’s mandate is to consider risks to the whole banking system. However having made the argument, APRA promptly forgets its systemic role and starts dabbling in the same mess that ASIC is trying to clean up, without much success."

A description of the Australian Prudential Regulation Authority (APRA) - Clayton Utz:

"APRA is a statutory authority which was formed in 1998 to promote the prudent management of financial institutions. Its regulatory function extends to the supervision of banks, life insurers, building societies, credit unions, friendly societies and superannuation funds. APRA has the power to require financial organisations to observe prudential standards, and may intervene, where necessary, to protect the interests of depositors, policy-holders or members. In addition, APRA has far-reaching powers of investigation, intervention and administration."

Below is an extract from Son of Campbell ... by Glenda Korporaal, The Australian, June 21, 2013

"Not as broad as the ground-breaking Campbell report, the Wallis recommendations led to the creation in 1998 of a central financial regulator, the Australian Prudential Regulation Authority, which took over bank supervision from the Reserve Bank and was also given oversight of the non-bank financial sector, including companies involved in insurance, superannuation and credit unions."

The origins of APRA - Fact Sheet 2 notes:

"The Wallis Inquiry recommended a functional model of financial regulation in Australia, in which four separate agencies are responsible for financial regulation. The four agencies are:

an agency responsible for the stability of the financial system as a whole and for the payments system — this is a traditional central banking role and is with the Reserve Bank of Australia (RBA);

an agency responsible for the prudential supervision of financial institutions in certain key financial industries — this is APRA;

an agency to monitor market conduct, including disclosure standards, consumer protection and consumer financial information — this is the Australian Securities and Investments Commission (ASIC); and

an agency overseeing competition in the financial system – this is the Australian Competition and Consumer Commission (ACCC)."

However, if the RBA designates and then creates an Access Regime for a Payments Scheme, the RBA, not the ACCC, is responsible for competition as set out in Memorandum of Understanding - Australian Competition and Consumer Commission and Reserve Bank of Australia dated 8 Sept 1998 because all the ACCC's responsibilities are taken over by the RBA.

See:

APRA Act 1998

APRA - Its Objectives and Powers

MEMORANDUM OF UNDERSTANDING APRA with RBA

Legislation that applies to APRA activities

Memoranda of Understanding and Letters of Arrangement

APRA take the easy road out with risk culture

Navigating the new Framework - APRA, RBA, ASIC and ACCC

The origins of APRA - Fact Sheet 2