APRA Minor Updates to the Prudential Framework: What ADIs Must Check

ByOfficer

On 10 July 2026, APRA opened its consultation on the 2026 APRA minor updates to the prudential and reporting framework. APRA describes the package as primarily technical clarifications without a material change in policy settings, but several proposals affect prudential calculations or reporting instructions. For ADIs, APS 120 would increase the credit conversion factor for qualifying undrawn servicer cash advances from 0 per cent to 10 per cent. Submissions are requested by 21 August 2026. APRA expects most changes to take effect from 1 January 2027, while remade sunsetting reporting standards would commence on their respective sunset dates.

APRA frames the package as primarily technical clarifications with no material change in policy settings, which holds for most of the twenty-seven documents and is why these rounds get skimmed and a substantive correction slips past a capital team until the finalised standard lands. This change note covers what the July 2026 package touches by entity type and where the marked-up drafts repay a close read.

Related reading: APRA’s APS 112 risk-weight changes for standardised credit-risk capital.

The dates that govern this consultation

  • 10 July 2026: APRA released the consultation letter, draft standards and draft guidance.
  • 21 August 2026: APRA requests submissions by this date.
  • November 2026: APRA expects to finalise the package.
  • 1 January 2027: intended effective date, except for sunsetting reporting standards that APRA remakes before their sunset dates.

What sits inside the APRA minor updates package

APRA proposes minor updates to 10 prudential standards, 15 reporting standards and two prudential practice guides. The prudential standards in scope are APS 110, APS 112, APS 113, APS 120 and APS 210 on the banking side; GPS 114 and GPS 115 for general insurers; LPS 230 for life insurers; and HPS 114 and HPS 115 for private health insurers. The two practice guides are APG 112 and APG 220, both on the ADI credit-risk side. Registrable superannuation entity licensees are drawn in through the reporting-standard changes rather than the prudential standards.

Most of the twenty-seven documents contain clarifications, drafting corrections or consequential updates, but APS 120 is not the only proposal with operational or reporting effects. The package also changes ARS 110.0 calculation instructions, removes the ISO 4217 restriction from ARS 117.0 and ARS 117.1, updates GRS 114.0 and GRS 114.1 reporting treatment, and changes primary keys or permitted values in several SRS returns. Teams should therefore screen every applicable standard and data item rather than treating all non-APS 120 changes as wording-only.

The APS 120 securitisation change is the one that reprices

APRA is lifting the credit conversion factor for undrawn servicer cash advances under APS 120 from 0 per cent to 10 per cent, and presents it as a correction rather than a new policy. The zero per cent unconditionally cancellable CCF was removed as part of the Basel III framework, but the corresponding amendment was, in APRA’s words, inadvertently omitted from the package of consequential amendments to APS 120. The gap surfaced during the Basel Committee’s Regulatory Consistency Assessment Programme review of Australia’s implementation of the leverage ratio.

A CCF converts the undrawn amount of an off-balance-sheet commitment into an exposure amount. Moving the factor from 0 per cent to 10 per cent therefore creates an exposure amount for qualifying undrawn servicer cash advances. The resulting securitisation RWA is reported through ARF 120.1 and aggregated in ARF 110.0. APS 110 also requires the APS 120 CCF for off-balance-sheet securitisation exposures in the leverage-ratio exposure measure. Those reporting links already exist; the July 2026 amendments to ARS 110.0 address separate calculation and labelling issues.

The correction applies only to undrawn servicer cash advances that meet paragraph 3 of Attachment D to APS 120. Drawn amounts remain part of the on-balance-sheet exposure amount, and other off-balance-sheet securitisation exposures retain their existing treatment. An ADI with no qualifying undrawn servicer cash advance facility has no exposure amount to recalculate; an ADI with such a facility should model the proposed uplift before the intended 1 January 2027 commencement.

The insurer capital changes are smaller but not cosmetic

Under GPS 114 and HPS 114, APRA proposes a conditional 20-business-day period for increased reinsurance recoverables from a reinsurer that is not APRA-authorised. Where the recoverable increases at the latest annual balance date on or after the second annual balance date following the event, the increased amount may be treated as supported if the relevant collateral, guarantee or letter of credit is put in place within 20 business days after that balance date. The treatment is limited to the increased amount and the relevant balance date.

Under GPS 115, APRA proposes to state that the outstanding-claims and premiums-liability risk charge for each class of business cannot be less than zero. Under HPS 115, the proposed floor applies to the outstanding-claims risk charge and separately to the health-insurance-business and health-related-insurance-business premiums-liability components. General and private health insurers should test the relevant calculations against the marked-up wording.

What each entity type should actually check

Review the package by entity type and use the marked-up drafts rather than the clean versions. The marked-up files show the tracked changes, and a repricing correction like the APS 120 factor is faster to spot there than inside a re-read of the clean standard.

For ADIs, the applicable review is broader than APS 120. Capital teams should assess the APS 120 CCF change; APS 112’s trail-commission netting clarification for standardised ADIs; APS 110’s leverage-ratio wording; APS 113’s terminology updates; the ARS 110.0 calculation and labelling corrections; and the aligned ARS 112.0 changes. IRRBB teams should review ARS 117.0 and ARS 117.1 because APRA proposes removing the ISO 4217 restriction. Credit-risk teams should review APG 112’s terminology updates and APG 220’s restructured-exposure and hardship guidance. MLH ADIs should review APS 210 because APRA proposes allowing continued recognition of debt securities removed from the RBA repo-eligible list solely because they entered the closed-book period. The remade ARS 731 series and ARS 796.0 should also be checked where applicable.

For general insurers, the review should cover GPS 114, GPS 115, GRS 114.0, GRS 114.1, GRS 114.1.G and GRS 440.0. Life insurers should review the LPS 230 cross-reference correction. Private health insurers should review HPS 114 and HPS 115. The prudential changes include the conditional 20-business-day security period and zero-floor clarifications; the general-insurance reporting changes include alignment to GPS 114, clarification of the GRS 114.0 default-stress treatment and revised year options in GRS 440.0. For RSE licensees, the changes are in SRS 332.0, SRS 550.0 to SRS 553.0 and SRS 605.0, including primary-key and permitted-value changes.

Why APRA’s minor-updates process rewards an early submission

APRA runs the minor framework update process so that technical and clarifying changes can be made without a full standalone consultation each time. The upside is speed; the cost is a short window and items that are easy to under-read.

A pure drafting fix needs little from a submission. Where a change carries an operational cost, such as the systems work to apply a new CCF or the model logic to floor an insurance risk charge, the consultation is the moment to put implementation timing on the record. Participation in the consultation is voluntary; a submission is the mechanism for putting an implementation cost or drafting concern on record before APRA finalises the standards.

Frequently Asked Questions

Is the APS 120 credit conversion factor change a new capital requirement?

APRA presents it as a correction. The 0 per cent unconditionally cancellable CCF was removed under Basel III but was not carried into APS 120 at the time, and the 10 per cent factor for undrawn servicer cash advances restores the intended treatment. The practical effect is still a higher exposure value for any ADI that provides those facilities.

Which ADIs are actually affected by the servicer cash advance change?

Only ADIs that provide undrawn servicer cash advances into securitisations. An ADI with no such facilities has nothing to recalculate. An ADI that does should model the uplift to its securitisation exposure and check the flow-through to its capital adequacy return and the leverage ratio exposure measure.

Does the 20-business-day reinsurance grace period apply to all reinsurance recoverables?

No. It applies only to an increase in a reinsurance recoverable from a reinsurer that is not APRA-authorised, measured at the latest annual balance date on or after the second annual balance date following the event. The relief is limited to that increased amount and applies only if the collateral, guarantee or letter of credit is put in place within 20 business days after the relevant annual balance date.

What do the GPS 115 and HPS 115 zero-floor amendments change?

GPS 115 would floor the outstanding-claims and premiums-liability risk charge for each class of business at zero. HPS 115 would floor the outstanding-claims risk charge and the two premiums-liability components specified for health insurance business and health-related insurance business. Insurers should test the affected calculations against the marked-up wording.

Do we have to make a submission by 21 August 2026?

Participation is voluntary; APRA requests submissions by 21 August 2026. A submission matters most where a proposed change carries an implementation cost or a genuine drafting ambiguity, because the window is the point at which those concerns are on the record before the standards are finalised in November 2026.

Related Articles

Key Takeaways

  • APRA’s July 2026 package proposes updates to 10 prudential standards, 15 reporting standards and two prudential practice guides. Submissions are requested by 21 August 2026; most changes are intended for 1 January 2027, with separate commencement dates for remade sunsetting standards.
  • APS 120 would increase the CCF for qualifying undrawn servicer cash advances from 0 per cent to 10 per cent. The resulting exposure can affect securitisation RWA and the leverage-ratio exposure measure.
  • APS 120 is not the package’s only operational or reporting change. Each entity must screen all applicable prudential standards, practice guides and reporting standards, including the ARS 110.0, ARS 117, GRS and SRS amendments.
  • GPS 114 and HPS 114 would allow an increased recoverable from a non-APRA-authorised reinsurer to be treated as supported where qualifying security is put in place within 20 business days after the relevant annual balance date.
  • GPS 115 would floor class-level outstanding-claims and premiums-liability risk charges at zero; HPS 115 would floor the outstanding-claims risk charge and the specified HIB and HRIB premiums-liability components.
  • Teams should review the marked-up drafts by entity type and submit feedback where implementation timing, reporting logic or drafting remains unclear.

Sources and References

  • APRA media release, “APRA consults on additional minor updates to the prudential and reporting framework”, 10 July 2026: apra.gov.au
  • APRA letter to industry, “Minor updates to APRA’s prudential and reporting framework”, 10 July 2026: apra.gov.au
  • APRA consultation page, “Minor updates to the prudential framework” (draft standards, marked-up drafts and draft guidance, including ARS 110.0 Capital Adequacy): apra.gov.au/consultations
  • Prudential Standard APS 120 Securitisation (APRA Prudential Handbook): handbook.apra.gov.au/standard/aps-120
  • Prudential Standard APS 110 Capital Adequacy, Attachment D (Leverage Ratio) (APRA Prudential Handbook): apra.gov.au/standards/aps-110

Read the marked-up drafts before the window closes

A minor-updates round still requires an applicability review. ADIs should assess the APS, APG and ARS changes relevant to their capital, credit-risk, liquidity, IRRBB and international-reporting processes. General and private health insurers should review both the prudential and GRS amendments, life insurers should check LPS 230, and RSE licensees should assess the affected SRS returns. Submit feedback where implementation timing, reporting logic or drafting remains unclear.

Last updated: July 2026

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