The Australian Prudential Regulation Authority (APRA) has issued a letter containing the initial observations from its targeted thematic review of the superannuation industry’s preparedness for Prudential Standard CPS 190 Recovery and Exit Planning (CPS 190). For registrable superannuation entity (RSE) licensees, CPS 190 will come into effect from 1 January 2025.

APRA says that while some RSE licensees are well progressed in meeting the minimum requirements of CPS 190, the thematic review identified common areas of weakness.

It reports that improvements are needed across:

• Early warning indicators and trigger levels in the trigger framework should be more relevant to RSE licensees’ operating environment and risk profiles;
• Enhanced preparatory measures should be considered for recovery and exit options, together with an uplift in capability to reduce execution risk; and
• Proactive communication strategies should be implemented to support the effective execution of recovery and exit plans particularly in periods of stress.

APRA conducted a survey of 12 RSE licensees to assess their readiness to comply with CPS 190, focusing on the requirements relating to trigger frameworks and recovery and exit actions. This was further supplemented by an in-depth review of four RSE licensees’ draft recovery and exit plans.

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