Regulatory Alerts2022-02-27
Our approach to supervision
The regulator issues this Statement of Prudential Policy to outline its risk-based, proportionate, and collaborative approach to supervising banks, insurers, and financial market infrastructures. The document mandates a low-risk appetite for outcomes that could harm financial system health or public confidence while aiming to promote a sound, competitive, and diverse financial system. It further details proactive engagement with industry stakeholders and close coordination with other domestic and international regulatory bodies to minimize systemic impacts.
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Our Statement of Prudential Policy
Information on how we approach prudential supervision of regulated entities.
Published:
Last updated:
Who we supervise
We supervise regulated:
banks
insurers
Financial Markets Infrastructures (FMIs).
We also regulate and license non-bank deposit takers (NBDTs) and work with trustee companies that supervise NBDTs compliance with their trust deeds.
Our Statement of Prudential Policy sets out our approach to how we make prudential policy.
Our approach to supervision
We take a risk-based approach
We take a risk-based approach to our supervision activities that is proportionate, collaborative and consistent. We have a low-risk appetite for outcomes that could harm the health of the financial system, undermine economic wellbeing and affect public confidence.
We promote a sound, competitive and diverse financial system
We aim to promote a sound, competitive and diverse financial system where market participants can make informed choices about risk. We encourage and incentivise sound management of institutions by directors and managers. In the event of major difficulties at a regulated entity, we aim to minimise the impact of those difficulties on the wider economy, the financial system and on depositors and policyholders.
We are proactive
We are proactive, open and constructive in engaging with industry and stakeholders. We develop and maintain a good working knowledge of our regulated entities and of the risks they are managing.
We work closely with:
the Financial Markets Authority (FMA), the Commerce Commission (ComCom) and other members of the Council of Financial Regulators
other Government agencies
Australian authorities for regulated entities with trans-Tasman activities or links.
Our relationship charter with regulated entities
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Information on our risk-based approach to enforcement and resolution.