Marking 25 years of APRA

Super Review has rounded up 10 key events from the history of the Australian Prudential Regulation Authority (APRA) as it marks 25 years since it was founded.

1998: APRA founded 

APRA was established by the federal government on 1 July 1998 following the recommendations of the Wallis inquiry into the Australian financial system with Graeme Thompson as its first chair. The body was tasked with supervising institutions across banking, insurance, and superannuation.

2001: HIH Insurance collapse

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In 2001, insurance company HIH Insurance collapsed in one of the largest failures in Australian history and exposed significant weakness in insurance regulation. The company was placed into liquidation in March 2001 with losses totalling $5.3 billion. A royal commission was held in 2003 to establish the cause of the company’s collapse.

2003: New chair appointed

John Laker takes over from Thompson as chair, joining from his role as deputy governor of the Reserve Bank of Australia. 

2004: NAB currency scandal 

APRA undertook an investigation into NAB’s banks and processes after four traders on the bank’s foreign exchange options trading desk carried out unauthorised trades that cost the big four bank $360 million in losses. APRA accused the joint head of foreign exchange of “inadequate oversight” of the desk’s operation. It also led to the departure of NAB’s chairman Charles Allen and CEO Frank Cicutto.

2008: Global financial crisis

During the GFC, APRA’s role was to ensure the stability of the financial system as well as stress-testing, monitoring the health and liquidity of authorised deposit-taking institutions, mitigating risks, and managing crises. It also worked closely with ASIC and the Reserve Bank of Australia to co-ordinate a response to protect Australians from the worst of the crises with Australia faring better than other countries such as the US and UK.

2011: SuperStream introduced 

SuperStream commenced in 2011 as a way to enhance the back office of superannuation and improve the productivity and speed of the superannuation system and its transactions. It required employers to submit super contributions electronically and ensure it was sent in a single transaction via a unique superannuation identifier for each employee’s chosen fund. This radically changed the way super was processed and allowed members to be reliably linked to their super, reducing duplicate or lost accounts.

2014: New chair appointed

Wayne Byres was appointed chair in 2014, replacing John Laker after a decade. During his time, Laker introduced significant reforms to superannuation funds, was made an Officer of the Order of Australia for his work during the GFC and later went on to work at ING Bank and the University of Melbourne. 

2018: Hayne royal commission 

APRA’s role in Hayne royal commission focused on its regulatory oversight of financial misconduct and its response to misconduct and breaches. The commission identified shortcomings in APRA’s risk assessment, inadequate enforcement of regulation, and insufficient consequences for misconduct. In response, the commission recommended changes to APRA’s supervisory practices and governance structure and granted APRA additional enforcement powers to improve its ability to address misconduct.

2021: Super performance test 

The annual performance test was introduced in 2021 as an annual test of super fund performance, intended to hold licensee to account for underperformance. If a fund fails the test once, they are required to identify the causes of underperformance and develop a plan to decide if it is necessary in the best financial interests of members to close the product, transfer members, and/or exit the industry. If they fail the test for a second time, the fund needs to be closed to new members.

2022: New chair appointed

Following the departure of Wayne Byres after eight years, John Lonsdale was appointed to take over as chair and Margaret Cole replaced Lonsdale as deputy chair. Prior to joining APRA in 2018, Lonsdale spent 30 years at the Australian Treasury. Announcing his appointment, Lonsdale said he would focus on managing technological developments, superannuation performance, and insurance affordability.