November 21st, 2022 | Sterling

Changes to APRA’s Prudential Framework

The Australian Prudential Regulation Authority (APRA) has announced that it will be reviewing its prudential framework with the aim of making its standards, guidance and advice “clearer, simpler and more adaptable.”

In an information paper released in September 2022 and a subsequent letter in October 2022, APRA outlined a roadmap to modernise the structure of prudential standards in an iterative manner over a number of years.

APRA plans to achieve this modernisation through a series of initiatives that are focused on:

  • better regulation – making standards and guidance easier to navigate, understand and implement
  • digital first – using supervisory technology (suptech) and regulatory technology (regtech) to support better regulation, and
  • new risks, new rules – developing approaches to meet emerging risks and new business models.

APRA pointed out that the financial landscape is changing quickly, particularly with the digitisation of finance, new business models and emerging innovations, which are all testing the existing regulatory framework.

Which industries will be impacted by the review?

The following industries will be affected:

  • financial services
  • banking
  • insurance, and
  • superannuation licensees.

APRA has further cited the emergence of cryptocurrency, digital assets and digital ledgers, which may also be affected by the revised framework.

How might the changes affect hiring?

There are several ways that APRA’s review may have an impact on hiring in the relevant industries.

  1. APRA expressed concern about the risks associated with cyber security; this may result in increasing obligations to implement strict security controls relating to employee and candidate data.
  2. The implementation of a digital first mindset will encourage the uptake of suptech and regtech solutions in order to support entities’ governance, risk and compliance (GRC) systems. These solutions and other digital tools may extend to the improvement of hiring practices and processes.
  3. In the September information paper, it is stated that APRA has developed and will pilot a new “Guide for Authorised deposit-taking institution (ADI)” to “support them in understanding their current obligations.” This new guide may affect the obligations and screening requirements of directors and board members prior to their appointment to boards.
  4. APRA has mentioned that its prudential framework needs to expand to cover “new business models and more complex group structures” as they pose “new challenges and accentuate existing risks.” Operators offering digital services such as cryptocurrency, digital assets and digital ledgers, along with groups that cover multiple industries, may therefore be affected by additional compliance obligations and should keep abreast of further announcements by APRA.

APRA has stated that the review will be “multi-year, iterative and evolutionary” with “incremental changes in the design of the framework.” We therefore expect to learn of changes gradually as APRA seeks industry feedback and implements pilot initiatives to improve the prudential framework.

How can Sterling help?

 Sterling are experts in the background screening industry in the Asia-Pacific region. We pride ourselves on our nuanced understanding of regulatory and compliance requirements in Australia and the surrounding region, and we are eager to share this advice and information with clients.

If you’d like to leverage our expertise, contact our Financial services experts at

This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.