On 12 September2025, the Australian Prudential Regulation Authority (APRA) published Therese McCarthy Hockey’s opening remarks to the Financial Services Institute of Australasia (FINSIA).

Ms Therese McCarthy-Hockey is a member of APRA’s Executive Board. In her opening remarks she covers the “three Ps” to illuminate APRA’s thinking behind its latest Corporate Plan:

  • Prudential: For APRA, the word “prudential” or its better known form “prudence” is about foresight, discipline, and resilience which has helped Australia weather global shocks and domestic challenges.
  • Productivity: The financial system has a critical role to play in lifting productivity whether it is through efficient capital allocation, digital innovation or better retirement outcomes.
  • Proportionality: Regulatory expectations are scaled and targeted. For APRA, this means that its framework has fewer and less onerous requirements in many areas for smaller, less complex institutions. APRA’s latest Corporate Plan has identified a range of initiatives that are designed to minimise regulatory burden for industry, where it is safe to do so. Collectively, these initiatives underpin APRA’s ambition to “get the balance right”, which was one of four key strategic objectives in the Corporate Plan.

To illustrate this, Ms McCarthy-Hockey briefly examined the dynamics of Australia’s banking sector. She notes:

  • A recent assessment by an international ratings agency of Australia’s banking system noted the strength of Australia’s prudential regulatory standards for banking and APRA’s supervision role in it. International ratings agencies’ strong positive assessment  lowers the cost of funding for banks and this benefits capital and liquidity flows. There is a clear alignment between two of the Ps: prudential and productivity.
  • Many in the community believe the ongoing market dominance of the major banks dampens competition, especially in regional areas. The challenge facing APRA is to encourage the rewards of increased competition, efficiency and innovation without eroding the benefits that accrue from a safe and stable banking system.
  • Cyber security is an area where the tension between prudential safety and proportionality is most apparent. The high fixed costs for maintaining digital systems and these inherently disadvantage smaller banks with shallower pockets. APRA’s prudential standard CPS 234 Information Security also sets out binding cyber-security requirements that all banks, insurers and super trustees must meet. Reducing cyber expectations for smaller banks could contribute to lower costs and help smaller banks compete financially with larger rivals but doing so would also create unacceptable prudential risks. In this battle of the P-words, “prudential” wins out.
  • APRA is taking other steps to reduce pressure on smaller banks without creating unacceptable risks.

In her final comments Ms Therese McCarthy-Hockey stated: “In an uncertain, volatile and deteriorating operating environment, our top P-word must always be “prudence” to preserve financial stability and protect the safety of bank deposits, insurance policies and Australians’ super savings. But with our commitment to getting the balance right, we believe we can achieve that goal while also supporting the push to prioritise productivity.”