meta_id 3186760

On May 27, 2026, the Australian Prudential Regulation Authority (APRA) confirmed plans to formally introduce a three-tiered approach to proportionality in its prudential framework for banking. The measure responds to the Council of Financial Regulators' Review into Small and Medium-Sized Banks, undertaken in consultation with the Australian Competition and Consumer Commission (ACCC), and aligns with APRA's strategic commitment to balance its primary mandate for financial safety and stability with considerations of competition and efficiency. Following a consultation that closed earlier in 2026, APRA confirmed it will proceed with three key proposals: introducing a third tier of Most Significant Financial Institutions (MSFIs) for banks with total assets greater than $300 billion; raising the asset value threshold for banks to qualify as a Significant Financial Institution (SFI) from $20 billion to $30 billion; and automatically providing a 12-month transition period when a regulated institution moves to a higher tier. APRA also commits to providing non-SFIs with additional time to comply with new and revised prudential requirements when appropriate. These changes embed additional proportionality into the banking framework and are designed to drive competition in the industry. Therese McCarthy Hockey, APRA Executive Board Member, said the changes reflect APRA's ongoing commitment to building further proportionality into the banking framework and supervision practices, with proportionality expected to deepen over time as APRA identifies more opportunities for greater differentiation between banking tiers. The changes take effect from July 1, 2026. APRA's formal letter responding to consultation submissions is available on the APRA website.

On May 27, 2026, the Australian Prudential Regulation Authority (APRA) confirmed plans to formally introduce a three-tiered approach to proportionality in its prudential framework for banking. The measure responds to the Council of Financial Regulators' Review into Small and Medium-Sized Banks, undertaken in consultation with the Australian Competition and Consumer Commission (ACCC), and aligns with APRA's strategic commitment to balance its primary mandate for financial safety and stability with considerations of competition and efficiency. Following a consultation that closed earlier in 2026, APRA confirmed it will proceed with three key proposals: introducing a third tier of Most Significant Financial Institutions (MSFIs) for banks with total assets greater than $300 billion; raising the asset value threshold for banks to qualify as a Significant Financial Institution (SFI) from $20 billion to $30 billion; and automatically providing a 12-month transition period when a regulated institution moves to a higher tier. APRA also commits to providing non-SFIs with additional time to comply with new and revised prudential requirements when appropriate. These changes embed additional proportionality into the banking framework and are designed to drive competition in the industry. Therese McCarthy Hockey, APRA Executive Board Member, said the changes reflect APRA's ongoing commitment to building further proportionality into the banking framework and supervision practices, with proportionality expected to deepen over time as APRA identifies more opportunities for greater differentiation between banking tiers. The changes take effect from July 1, 2026. APRA's formal letter responding to consultation submissions is available on the APRA website.