APRA is consulting on proposals to introduce a phased approach to authorisation, designed to make it easier for applicants to navigate the ADI licensing process.

The phased approach is intended to support increased competition in the banking sector by reducing barriers to new entrants to be authorised to conduct banking business, including those with innovative or otherwise non-traditional business models or those leveraging greater use of technology. In particular, the purpose of the new Restricted ADI licence is to allow applicants to obtain a licence to begin limited operations while still developing the full range of resources and capabilities necessary to meet the prudential framework.

In facilitating a phased approach, APRA still needs to ensure community confidence that deposits with all ADIs are adequately safeguarded. APRA also needs to ensure that any new approach does not create competitive advantages for new entrants over incumbents, or compromise financial stability. Therefore, reflecting their relative infancy, Restricted ADIs will be strictly limited in their activity and would not be expected to actively conduct any banking business during the restricted period.

APRA Chairman Wayne Byres said: ‘APRA’s proposed changes to its licensing approach are intended to deliver benefits to the community through facilitating increased innovation and competition in the banking industry, while still maintaining a resilient, sound and stable financial system.’

APRA invites written feedback from interested stakeholders on the proposed phased approach to ADI licensing by 30 November 2017. Following consideration of submissions received through this consultation, APRA anticipates it will release the final approach to phased licensing for ADIs, and additional guidance material for applicants, in the early part of 2018. In the meantime, APRA encourages new applicants, where applicable, to discuss with the licensing team whether the general approach outlined in this paper could be applied to their assessment.