In testimony published for a parliamentary committee appearance, the Australian Prudential Regulation Authority said Australia's financial system remains resilient but faces a more volatile risk environment, and that it is intensifying supervision of artificial intelligence governance, cyber resilience, supplier concentration and possible spillovers from global private credit markets. The regulator said it is sharpening supervisory intensity across banks, insurers and superannuation through clearer risk management expectations, targeted reviews and enforcement where prudential standards are not met. Recent actions include higher capital overlays, licence conditions on several entities and the disqualification of an individual under the Financial Accountability Regime since APRA's previous committee appearance. After reviewing platform trustees responsible for around 95 per cent of platform assets under management, APRA directed trustees to address weaknesses and report breaches, then took enforcement action against five trustees for investment governance failings by imposing licence conditions on Diversa Trustees, Fiducian, Equity Trustees and HTFS and accepting a court enforceable undertaking from Netwealth. It also said domestic private credit remains relatively contained at about AUD 200 billion, or roughly 3 per cent of the banking system, while bank macroprudential settings remain unchanged, including the 3 percentage point serviceability buffer, the 1 per cent countercyclical capital buffer and the cap allowing up to 20 per cent of new owner-occupied and investment mortgage lending at debt-to-income ratios of six times or more. APRA said it will continue remediation work and may consider further prudential changes for platform trustees, is finalising a forward supervisory plan for AI risks, and expects to publish Phase 2 findings from its system risk stress test in mid-2026, with findings from a joint bank stress test with the Reserve Bank of New Zealand to follow later in the year.
Australian Prudential Regulation Authority2026-06-05
Australian Prudential Regulation Authority details intensified AI cyber and private credit supervision and action against five super trustees
The Australian Prudential Regulation Authority told a parliamentary committee the financial system remains resilient but faces a more volatile risk environment, and it is intensifying supervision of AI governance, cyber resilience, supplier concentration and private credit spillover risks. It cited higher capital overlays, licence conditions on several entities, a Financial Accountability Regime disqualification, and enforcement against five platform trustees for investment governance failings, while leaving macroprudential settings unchanged. APRA plans further remediation and possible prudential changes for platform trustees, is finalising a supervisory plan for AI risks, and will publish Phase 2 system stress test findings in mid-2026, followed by results of a joint bank stress test with the Reserve Bank of New Zealand.