The Australian Prudential Regulation Authority (APRA) on Thursday (22 August) announced it has finalised Prudential Standard CPS 001 Defined terms, which will take effect from 1 October 2024.
This new standard aims to consolidate and streamline definitions across the prudential framework for general, life, and private health insurers, as well as authorised deposit-taking institutions.
In a letter to the industry, APRA said that CPS 001 consolidates five existing standards into one, removing obsolete terms and addressing duplications. It also formalises definitions of ‘general provisions’ and ‘specific provisions.’
The initiative to define the terms had begun with the release of a draft version of CPS 001, on 27 November 2023, followed by a consultation period. The final version incorporated feedback from three industry submissions, APRA said.
The regulatory body added that respondents broadly supported merging existing standards and suggested further improvements to align definitions across the prudential framework and with terms already defined in law.
The standard explicitly links each defined term to the relevant industries, aiding the operation of APRA’s new digital Prudential Handbook. Launched in June 2024, the Handbook serves as a comprehensive resource for all APRA standards and guidance, facilitating easier access to and understanding of defined terms.
The primary objective of CPS 001 is to support the interpretation of APRA’s prudential framework by centralising defined terms used in the ADI and insurance prudential frameworks. Some terms within the standard refer to definitions in legislative acts, other prudential standards, or standards issued by other bodies.
APRA has acknowledged that there is further scope to streamline definitions and improve consistency across the prudential framework. The feedback received will be considered for future improvements.
