Mackay Chapman APRA May Update

APRA BLOG:

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In this month’s APRA update:

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• in1Bank’s banking licence revoked following industry exit
• Financial institutions urged to strengthen AI risk governance
• APRA updates guidance on reporting large exposures
• Guidelines for external credit assessment institutions under review

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More details below.

in1Bank’s banking licence revoked following industry exit

APRA has formally revoked the ADI licence of in1Bank Limited after the bank completed its withdrawal from the Australian banking industry. The decision follows the company’s earlier announcement that it intended to exit the sector and return customer deposits.

The deposit return process was completed in March 2026, allowing the regulator to revoke the licence under the Banking Act. The move means in1Bank is no longer authorised to operate as a bank or accept deposits in Australia.

Financial institutions urged to strengthen AI risk governance

APRA has warned banks, insurers and superannuation trustees that governance and risk management practices are not keeping pace with the rapid adoption of artificial intelligence across the financial services sector. 

In a new letter to industry, the regulator called for a significant uplift in how organisations manage AI-related operational, cyber and governance risks; identifying concerns such as overreliance on single technology providers.

APRA also noted that advanced AI tools could accelerate the speed and scale of cyber attacks if vulnerabilities are not properly managed.

APRA updates guidance on reporting large exposures

APRA has updated its Frequently Asked Questions relating to Prudential Standard APS 221 Large Exposures, providing further clarification on how ADIs should calculate and report exposures to structured vehicles.

The revised guidance focuses on the use of the “stored value look through methodology” and is intended to assist industry participants in complying with APRA’s reporting expectations. 

ADIs are expected to comply with the updated reporting guidance by 31 December 2026. 

Guidelines for external credit assessment institutions under review

APRA has temporarily withdrawn its Guidelines on Recognition of an External Credit Assessment Institution as part of a broader review of its prudential framework and regulatory guidance.

The Guidelines, which were last updated in 2013, relate to the recognition of external credit assessment institutions used within Australia’s prudential regulatory system. APRA said the withdrawal forms part of its ongoing review process to ensure prudential standards and guidance remain current and effective.

While the review is underway, APRA has indicated it will provide further updates once the revised guidance process is complete.

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The contents of this article do not constitute legal advice and it is not intended to be a substitute for legal advice and should not be relied upon as such.  It is designed and intended as general information in summary form, current at the time of publication, for general informational purposes only.  You should seek legal advice or other professional advice in relation to any particular legal matters you or your organisation may have.

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