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The changes will simplify and speed up the licensing process for lenders looking to enter the sector.
APRA said it is reviewing the current framework to ensure it remains “fit for purpose” and supports the ever-changing and quickly evolving lending environment.
According to the regulator, the proposed changes will:
- Clearer licensing expectations: APRA would replace existing licensing expectations set out in guidelines with a more explicit and targeted set of formal criteria.
- Quicker and more transparent licensing decisions: Future applicants would have 12 months from submitting their application to demonstrate they meet APRA’s new licensing criteria. Following this period, APRA would target a licensing decision within three months, with all decisions made public.
APRA said it sees potential to increase efficiency in the licensing process through targeted adjustments to its framework.
APRA member Therese McCarthy Hockey said this would ensure new-to-market lenders are in a better position to remain sustainable.
She recognises that while the success of a lender is largely determined by its business model and product offerings, licensing issues can be a burden that limits potential.
“Our intention is for these changes to help aspiring banks navigate the licensing process more efficiently and reduce the time and cost associated with obtaining a banking licence,” said McCarthy Hockey.
The latest proposition is part of regulators’ plans to support competition and efficiency in the banking sector.
McCarthy Hockey said the review into licensing aligns with the objectives of the Council of Financial Regulators’ and the Australian Competition and Consumer Commission’s recent review into small and medium-sized banks.
