What is the difference between ASIC and APRA?
APRA is responsible for supervising institutions within the financial services industry for the benefit of the community, where as ASIC is responsible for regulating the corporate activity and financial markets.
The Australian Securities & Investments Commission (ASIC) is an independent Australian Government Body responsible for regulating companies, financial markets, financial services and consumer credit. The Australian Prudential Regulation Authority (APRA) is an independent statutory authority responsible for supervising organisations in the financial services industries, such as superannuation, banking and insurance.
While the industries in which these bodies operate are the same, their roles & responsibilities are very different. APRA is responsible for supervising the institutions operating in these industries. APRA is mandated to maintain the the safety of the financial system to ensure the community maintain confidence in the financial system, and institutions which operate within it. ASIC more broadly regulates corporate activity and financial markets, rather than specific institutions. ASIC's regulatory responsibilities are set out in the Australian Securities and Investments Commission Act 2001 (ASIC Act) and the Corporations Act (2001).
APRA is particularly focused on institutions to which the community at large must extend a significant amount of trust. For example, deposit taking institutions such as banks and credit unions. If the public were to lose faith in their banks, they would remove their deposits, which has the potential to cause a 'run on the bank' if enough deposits demanded their money immediately.
In the short term, this would be extremely disruptive to the financial industry, and the community at large that depends on the smooth operation of the financial system. To instill public confidence in deposit taking institutions the Australian government insures all deposits in authorised deposit taking institutions for amounts up to AUD$250,000.
A portion of APRA role is to ensure that these authorised deposit taking institutions are acting responsibly in their role a deposit holders. As the government is responsible for those deposits in the event that the bank forecloses, it becomes APRA's responsibility to ensure the institution is not putting customers deposits at risk.
Source:ASIC and APRA
What does APRA stand for?
APRA stands for Australian Prudential Regulation Authority.
APRA is an Australian regulatory authority which aims to supervise financial services industries and institutions under it's 'predential' standards. Colloquially prudential stands 'good judgement' or 'commonsense', and thus APRA aims to regulate these industries to encourage stable financial system within Australia. APRA overseen by the Australian Parliament, and therefore it can be held accountable for it's policies by politicians, and in theory (as representatives of the population), the people themselves.
In regulating financial institutions APRA works closely with other institutions such as the Reserve Bank of Australia, the Australian Treasury and the Australian Securities and Investments Commission (ASIC).
What industries does APRA regulate?
APRA is most known for supervising instituations within the superannuation, banking and insurance industries.
But the list of organisations that fall under APRA's supervision is much larger. APRA holds authority over institutions that are authorised to take deposits (for example a bank, credit union, building society or online only bank). They oversee institutions that provide insurance including life insurance, general insurance, home & contents insurance, car insurance, business insurance, professional insurance, private health insurance and many more. They also oversee long term savings scheme's such superannuation funds, self managed superannuation funds (SMSF), pension funds and other forms of retirement planning / funding.