APRA Opens Consultation on Prudential Changes Affecting Australian Banks and Insurers

The Australian Prudential Regulation Authority released a consultation package on 10 July 2026 proposing amendments to its prudential and reporting framework for authorised deposit-taking institutions, general, life and private health insurers, and superannuation trustees. Submissions close on 21 August. While framed as a technical housekeeping exercise spanning 10 prudential standards, 15 reporting standards and two prudential practice guides, the package contains several items with direct operational consequences. For banks, the most significant concerns APS 120 Securitisation, where APRA proposes raising the credit conversion factor for undrawn servicer cash advances from 0% to 10%, presented as a correction following the removal of the unconditionally cancellable factor under Basel III rather than a policy change. For general insurers, a proposed amendment to GPS 114 introduces a 20-business-day grace period after an annual balance date to arrange collateral, guarantees or letters of credit supporting reinsurance recoverables from non-APRA-authorised reinsurers where those recoverables have increased. Another amendment closes off the possibility of a negative risk charge artificially reducing an insurer's prescribed capital amount. The minor-updates process has run annually since June 2023, and this round arrives while APRA operates under government direction to reduce compliance costs. APRA expects to finalise the package in November, with most changes effective from 1 January 2027.