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6-month hold for new financial institutions
No new banks, super funds or insurance providers will pop up in Australia in the foreseeable future, with the prudential banking regulator wanting to maintain the “unique position of trust” of Australia’s financial institutions.
6-month hold for new financial institutions
No new banks, super funds or insurance providers will pop up in Australia in the foreseeable future, with the prudential banking regulator wanting to maintain the “unique position of trust” of Australia’s financial institutions.
The Australian Prudential Regulation Authority’s (APRA) regulatory affairs and licensing general manager, Melisande Waterford, has written an open letter to all licence applicants to indicate that it will be temporarily suspending the issuance of new APRA licences, with the temporary hold expected to last “at least six months”.
“The global COVID-19 virus has led to a fundamental change in the economic and social environment in Australia and globally,” it read.
“Financial institutions, particularly those that take customer deposits, look after superannuation funds or issue insurance, occupy a unique position of trust.”
APRA said its experience has shown “that it is challenging for new entrants to succeed under normal economic conditions, which is why APRA does not consider it prudent to license APRA-regulated entities at this time”.
In outlining its position, APRA also highlighted its role in promoting financial system stability in Australia.
“APRA aims to achieve an appropriate balance between financial safety and other important considerations to the community – efficiency, competition, contestability and competitive neutrality,” it stated.
The new approach to licensing will be under review as the operating environment stabilises, APRA said.
Ms Waterford said APRA will continue to assess current licence applications during this time “so the delay on launching when the hold is lifted is minimised”.
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