The Standard codifies several core concepts and mechanisms for intra-group risk oversight.

• ITE definition and scope. An intra-group transaction and exposure is the total exposure, including on- and off-balance sheet items, of a Level 3 institution to another Level 3 institution within the same Level 3 group (s 6). This makes clear that both balance-sheet and contingent exposures fall within the scope of the Standard.

• ITE policy as primary control instrument. The required ITE policy is the principal instrument for governing intra-group exposures. It must address "all material risks" arising from ITEs and must set out systems and procedures to identify, measure, monitor, evaluate, report and control or mitigate those risks (s 7). The policy must be conceptually sound, consistently implemented, transparent and subject to independent review (s 12(a)).

• Forward-looking assessment. The Standard explicitly requires forward-looking scenario analysis and stress testing of material ITEs, with an express focus on how changes in market conditions and key risk factors affect the group's risk profile, capital strength and earnings (s 8). This links intra-group exposure management directly to capital and earnings metrics.

• Governance allocation. The Board of the Level 3 Head has statutory responsibilities: formal approval of the ITE policy, documented assurance that adequate systems and controls exist, oversight (which may occur via a board committee), and an annual review of the policy (s 10). The Standard therefore places governance duties at the Level 3 Head board level rather than delegating them solely to individual institution boards.

• Arms-length proviso and documentation on deviations. Where an individual prudentially regulated institution proposes intra-group terms not consistent with arms-length terms, those terms must be approved by the Level 3 Head Board and fully justified and documented (s 11). This imposes an ex ante control on non-standard intra-group pricing or terms.

• Limits and stress on capital/liquidity. The policy must include limits on acceptable levels of ITEs for each Level 3 institution, taking into account Board-approved limits for exposures to unrelated institutions of comparable credit status, and the potential impact of a failure of any other institution on the group's capital and liquidity and the institution’s ability to continue operating (s 12(c)(i)-(ii)). That embeds a requirement to consider contagion and systemic implications within the group.

• Group-wide operations obligations. The Standard addresses risks from shared premises, centralised back-office functions and outsourcing of services to other Level 3 institutions, requiring standalone risk consideration, documentation in written service agreements, facilitation of APRA information access and contractual clauses requiring service providers to comply with APRA directions (ss 13-14(c),(d),(e)).

• Reporting and supervisory reach. The Level 3 Head must incorporate ITE reporting into management information systems (s 15), provide reports on material ITEs to APRA on request (s 16), submit the ITE policy to APRA within 10 business days of Board approval (s 19) and notify APRA within 10 business days of breaches or material deviations (s 18). APRA may require limits or specify calculation methods for ITEs (s 17) and may adjust or exclude requirements (s 20).

• Supervisory formality. Where APRA exercises a power or discretion under this Standard, that exercise must be in writing (s 5). The Standard therefore formalises supervisory decisions.

These concepts operate together. The ITE policy is the operational centrepiece, the Board is required to adopt and maintain it, management must implement reporting and stress testing, and APRA retains supervisory levers including information requests, notifications, remedial directions, the power to set or change calculation methods and the power to require a reduction of ITEs.

The Standard applies to each Level 3 Head (Application, s 2). The text uses defined terminology from Prudential Standard 3PS 001 Definitions; Level 3 Head and Level 3 group are defined terms and appear in bold when used. The Standard therefore reaches all prudentially regulated institutions that fall within a Level 3 group and the Level 3 Head as the legal entity designated as head of that consolidated group. Individual prudentially regulated institutions inside the Level 3 group are also directly affected because the Board of the Level 3 Head must ensure that systems and controls are in place across the group (s 10(b)), and individual institutions must adhere to the ITE policy, limits, escalation procedures and documentation requirements (s 12(d)).

Who pays. Compliance costs fall primarily on the Level 3 Head and the prudentially regulated institutions within the Level 3 group. Those parties must prepare and maintain the ITE policy (s 7, s 12), conduct scenario analysis and stress testing (s 8), establish and maintain management information systems to capture ITE reporting (s 15), create and manage written service agreements for group-wide operations (s 14(c)), and implement internal escalation and approval mechanisms (s 12(d)(ii)-(iii)). There are also potential costs resulting from APRA intervention: if APRA requires a reduction of ITEs (s 17), the Level 3 Head may need to restructure intra-group exposures, alter liquidity arrangements or change pricing, which can generate transactional, legal and operational costs.

Who decides. Primary decision-makers are the Board of the Level 3 Head, senior management of the Level 3 group and, ultimately, APRA. The Level 3 Head Board must approve and review the ITE policy and must pre-approve non-arms-length intra-group terms (s 10, s 11). Senior management must implement the policy and ensure reporting systems operate (s 7, s 15). APRA has supervisory discretion to require reductions or limits, to determine calculation methods, to request reports, and to grant adjustments or exclusions to the Standard (ss 16-17, s 20).

Third parties. Where group-wide operations involve external parties, the policy requires transparency of dealings with entities external to the Level 3 group that are associated with ITEs (s 12(d)(vi)). Service providers must be contractually obliged to comply with APRA directions related to operations of prudentially regulated institutions (s 14(e)). Therefore suppliers, outsourced providers and counterparties engaged in intra-group arrangements are indirectly affected through contractual requirements and transparency obligations.

Nature of exposures covered. The Standard covers both on- and off-balance sheet exposures (s 6). That extends the reach beyond traditional bilateral loans to guarantees, contingent exposures, and other contractual relationships between group members.

The Standard’s scope and duties therefore place obligations at the group-head level while imposing substantive operational and reporting burdens on the prudentially regulated subsidiaries. APRA’s supervisory powers and the requirement that its exercise be in writing (s 5) mean regulated entities are subject to formal directions and potential bespoke variations (s 20).

Duties established by the Standard are concentrated on the Level 3 Head, with obligations that cascade to prudentially regulated institutions within the Level 3 group.

Primary duties

• Establish an ITE policy. The Level 3 Head must have an ITE policy that addresses all material risks from ITEs across the Level 3 group and must include systems and procedures to identify, measure, monitor, evaluate, report and control or mitigate these risks (s 7).

• Conduct forward-looking analysis. The Level 3 Head must conduct forward-looking scenario analysis and stress testing of material ITEs, assessing impacts on risk profile, capital strength and earnings (s 8).

• Integrate ITE management into the risk management framework. The Level 3 group must treat ITE management as part of its risk management framework (s 9).

Board-specific duties

• Approve policy and oversight. The Board of the Level 3 Head must approve the ITE policy, ensure adequate documented systems and controls for ITEs, engage in oversight (potentially via a board committee) of identification, measurement and monitoring of ITEs and review the ITE policy at least annually (s 10).

• Pre-approve non-arms-length terms. If a prudentially regulated institution proposes intra-group terms inconsistent with arms-length terms, the Level 3 Head Board must approve those terms, with full documented justification (s 11).

Content and procedural duties

• Policy content requirements. The policy must be conceptually sound, consistently implemented, transparent and independently reviewed; capture all material ITEs; include limits on acceptable levels of ITEs for each institution in the group, taking into account Board-approved limits to unrelated counterparties and the impact on capital and liquidity; and include detailed procedures for responsibilities, escalation, approvals for exceeding limits, conflict resolution, participation in group-wide operations, transparency of dealings with external entities, reporting thresholds and review timetables (s 12(a)-(d)(viii)).

• Group-wide operations policies and documentation. The Level 3 Head must establish policies for risks from participation in group-wide operations (s 13) and, where institutions participate, consider standalone risks, ensure such ITEs are addressed by group risk policies, document dealings in written service agreements, facilitate APRA’s access to information for supervision, and contractually oblige service providers to comply with APRA directions (s 14).

• Internal reporting systems and APRA reporting. Management information systems must incorporate ITE reporting across the Level 3 group (s 15), and reports on material ITEs must be provided to APRA on request (s 16). The ITE policy must be submitted to APRA within 10 business days after Board approval (s 19). Notification of breaches, material deviations or inadequacies of the ITE policy must be given to APRA as soon as practicable and no more than 10 business days after the Level 3 Head becomes aware (s 18).

APRA’s powers and rights

• Supervisory intervention. APRA may require the Level 3 Head to limit or reduce the group's level of ITEs and may determine how ITEs must be calculated (s 17). In making such determinations APRA may take account of policy compliance, characteristics of the ITEs, the nature of the Level 3 group and management experience (s 17(a)-(d)).

• Adjustment or exclusion. APRA may adjust or exclude specific requirements of the Prudential Standard in relation to a Level 3 Head (s 20).

• Formal exercise requirement. Where APRA exercises its powers or discretion under the Standard, it must be done in writing (s 5). APRA can request reports on material ITEs (s 16).

Rights and practical consequential obligations

• Right to request information and require changes. APRA has the right to request reports and to require reductions or limits, which translates into an operational obligation on the Level 3 Head to be able to measure ITEs in the manner APRA specifies and to act within timeframes specified by APRA (ss 16-17).

• Contractual requirements on service providers. The Level 3 Head must ensure written agreements include obligations on service providers to comply with APRA directions concerning operations of prudentially regulated institutions (s 14(e)). This is an indirect constraint on outsourcing arrangements and suppliers.

Procedural constraints and documentation duties add up to a consistent theme: the Level 3 Head must produce and maintain a comprehensive, independently reviewed policy framework with board oversight, concrete limits, reporting systems and contractual arrangements, and must be prepared to act on APRA’s formal, written supervisory requirements.

The Prudential Standard itself sets out supervisory powers and reporting requirements but does not specify monetary fines or criminal penalties within its text. Instead, the Standard concentrates on APRA’s supervisory and administrative levers and procedural requirements.

Supervisory enforcement mechanisms present in the Standard

• APRA’s power to require limits or reductions. APRA may require a Level 3 Head to limit or reduce the group's level of ITEs and may require the Level 3 Head to calculate ITEs in a particular way (s 17). Those are interventionist administrative powers that, if exercised, will compel changes to the group's exposures.

• APRA’s right to receive reports and require information. Reports on material ITEs must be provided to APRA on request (s 16). The Level 3 Head must submit its ITE policy to APRA within 10 business days of Board approval (s 19) and notify APRA within 10 business days of breaches or material deviations (s 18). Failure to comply with information and notification obligations will expose the Level 3 Head to APRA supervisory action under the statutes that give APRA powers, namely the Banking Act 1959, the Insurance Act 1973 and the Life Insurance Act 1995 (Authority, s 1), even though this Prudential Standard does not recite the specific statutory enforcement tools.

• APRA’s capacity to make written determinations. The Standard requires APRA’s exercise of any power or discretion under the Standard to be in writing (Interpretation, s 5). A written APRA requirement or determination is a formal instrument that can be relied upon in supervisory processes and would typically be the basis for further action under the enabling Acts.

• Adjustments and exclusions. APRA may adjust or exclude a specific requirement of the Standard in relation to a Level 3 Head (s 20). This gives APRA an administrative tool to tailor supervisory expectations; conversely a refusal to grant an adjustment or an exclusion may functionally act as an enforcement decision.

Consequences not specified in the Standard but implied by interaction with enabling Acts

• The Standard does not itself prescribe penalties such as fines or licensing action. However the Authority clause identifies the statutory bases for the Standard: s 11AF of the Banking Act, s 32 of the Insurance Act and s 230A of the Life Insurance Act (Authority, s 1). Under those Acts APRA possesses broader regulatory powers, including directions and other statutory enforcement measures. This Standard links conduct and reporting obligations into that statutory framework by reference rather than by setting out separate penalty clauses.

• Reporting and remedial obligations. The Standard sets bright-line timeframes for notification to APRA of breaches and for submission of the ITE policy (ss 18-19). Those timeframes impose operational duties that, if not met, will bring the entity into APRA’s supervisory processes.

Practical enforcement implications

• APRA’s written requirements under s 17 or written decisions under s 5 will be the instrument through which the supervisor compels reduction of exposures, altered calculations, or other remedial steps. Those orders will be founded on the supervisory Acts rather than on the Standard per se.

• The Standard’s absence of enumerated criminal or administrative penalties does not remove enforcement risk. APRA may rely on its statutory powers under the enabling Acts to effect enforcement, and the requirement that APRA decisions be in writing (s 5) creates a formal record that can be used as the basis for such action.

• Contractual enforcement. The Standard requires service provider agreements to obligate providers to comply with APRA directions (s 14(e)). That creates contractual rights and potential remedies for prudentially regulated institutions vis-à-vis third-party providers should those providers refuse to adhere to directions required by APRA.

In summary, enforcement under this Standard is operationalised through APRA’s supervisory levers,requirements to provide information and reports, written directions to limit or reduce ITEs, and the possibility for APRA to tailor or vary obligations,rather than through standalone penalty provisions in the Standard itself. The enabling legislation referenced in the Authority clause provides the statutory backbone for any formal enforcement action that may follow non-compliance.

The Standard is made under and interacts with the Banking Act 1959, the Insurance Act 1973 and the Life Insurance Act 1995, specifically s 11AF of the Banking Act, s 32 of the Insurance Act and s 230A of the Life Insurance Act (Authority, s 1). Those statutory provisions provide APRA with the power to make prudential standards; this Standard operates as an instrument within that regulatory architecture.

Interaction with definitional instrument

• Reliance on external definitions. The Standard uses defined terms that are set in Prudential Standard 3PS 001 Definitions, as noted in Interpretation s 4. Accordingly, interpretation of core concepts such as Level 3 Head and Level 3 group is governed by that separate definitional Prudential Standard. Compliance and risk measurement hinge on those definitions.

APRA supervisory framework

• Supervisory powers and statutory enforcement. The Standard prescribes duties and reporting obligations but does not set out the full spectrum of statutory sanctions. Instead, it operates within the APRA supervisory framework created by the enabling Acts (Authority, s 1). Where APRA requires reductions or imposes conditions under this Standard, it will generally do so under powers granted under the enabling legislation; the Standard therefore acts as a description of expectations whose breach can be escalated via statutory powers.

Contract law and commercial arrangements

• Written service agreements. The Standard mandates written service agreements for participation in group-wide operations and requires obligations for service providers to comply with APRA directions (s 14(c),(e)). This provision interacts directly with general contract law and suggests that group contracts should include clauses enabling compliance with regulatory directions and the flow of supervisory information to APRA.

Corporate governance and director duties

• Board obligations and corporate law. The Standard imposes board-level duties on the Board of the Level 3 Head to approve and review the ITE policy and ensure appropriate systems and controls are in place and documented (s 10). Those obligations will sit alongside directors’ duties under general corporate law. Entities must therefore manage overlap between prudential governance requirements and statutory or common law director duties.

Accounting and capital regime

• Capital and liquidity impacts. The Standard requires stress testing and assessment of impacts on capital strength and earnings (s 8), and requires policy limits to consider potential impacts on capital and liquidity positions if a group member fails (s 12(c)(ii)). This links ITE management to prudential capital and liquidity frameworks established by APRA and applicable accounting standards. Decisions taken under this Standard may therefore have consequences for regulatory capital calculations and liquidity management frameworks.

Privacy and information access

• APRA access to information. The Standard obliges the Level 3 Head to facilitate APRA obtaining information required for supervision of institutions or the group as a whole (s 14(d)) and requires provision of reports on request (s 16). These obligations interact with privacy and confidentiality considerations; in practice entities will need to ensure disclosure to APRA complies with any statutory limits on information sharing and with contractual confidentiality terms, bearing in mind that the Standard expressly requires written service agreements to provide for APRA compliance and information access (s 14(c),(d)).

Regulatory consistency and tailoring

• APRA adjustments and exclusions. APRA may adjust or exclude a specific requirement of the Standard in relation to a Level 3 Head (s 20). That creates a formal mechanism for tailoring obligations where necessary, and implies that APRA’s written decisions (s 5) can carve out variations to the Standard in particular cases. Entities must therefore consider both the baseline Standard and the possibility of bespoke supervisory arrangements.

In short, the Standard is designed to operate within APRA’s statutory prudential regime and to interact with corporate, contract, accounting and privacy frameworks. It references and relies upon external definitional instruments and the enabling Acts for statutory enforcement, and it requires contractual provisions that will need to be reflected and enforced within routine commercial arrangements.

The Standard records its commencement date and the statutory sources under which it was made. It states that it commences on 1 July 2017 and applies to each Level 3 Head (Application, ss 2-3). The Authority clause identifies the statutory bases for the Standard in the Banking Act 1959, the Insurance Act 1973 and the Life Insurance Act 1995 (Authority, s 1).

The text of the Standard does not include any subsequent amendment provisions, transitional arrangements, or amendment dates apart from the stated commencement date. It does, however, contain an express power for APRA to adjust or exclude specific requirements in relation to a Level 3 Head (s 20). That clause functions as an in-built mechanism for tailoring the Standard without the need for formal amendment of the Standard itself. It permits APRA to provide bespoke variations to application for particular Level 3 Heads, subject to APRA’s internal processes and the requirement that APRA’s exercise of powers or discretion under the Standard be in writing (s 5).

The Standard also refers to definitions that sit in Prudential Standard 3PS 001 Definitions (Interpretation, s 4). Changes to that definitional instrument would alter the meaning and operation of this Standard without necessitating amendments to this text.

Because the instrument supplied here contains no express amendment log or history beyond commencement, the only amendment-related features contained in the Standard itself are:

• the commencement date, 1 July 2017 (s 3);

• the statutory authority under which the Standard is made (s 1); and

• the APRA power to adjust or exclude specific requirements for particular Level 3 Heads (s 20), coupled with the formal written requirement for the exercise of APRA discretion (s 5).

Any subsequent legislative or prudential amendments, orders, or decisions that affect the Standard would be documented elsewhere in APRA publications or in amending instruments. Within the text provided, the Standard’s amendment history is limited to its commencement and the internal flexibility tools described above.

The provided text contains no references to judicial decisions, litigation, disputes, or precedential cases concerning the Standard. It does not cite any litigation or administrative appeals, nor does it indicate any contested interpretations that have been decided by courts or tribunals. The Standard does not itself set out an appeal mechanism for APRA’s written decisions under it; however APRA’s exercise of statutory powers under the enabling Acts may be subject to existing avenues for review or appeal provided in those Acts or in general administrative law, but those avenues are not described in this text.

The Standard includes several footnote references [1]-[4] embedded in the text (for example at s 9, s 14(c), s 15 and s 20). The contents of those footnotes are not reproduced here. The footnotes may contain cross-references or clarifying material but cannot be relied upon without access to the footnote content.

Because no litigation material appears in the instrument text supplied, readers seeking information on any enforcement or dispute history must consult external sources: APRA published decisions, administrative law appeals, or court judgments that reference the Standard and the enabling Acts. The Standard itself, as provided, offers no litigation history to cite.

The text contains several operationally material traps for boards, management and in-house counsel and compliance teams. These are factual mechanisms that can create compliance risks if not anticipated.

• Defined terms handled elsewhere. The Standard relies on definitions in Prudential Standard 3PS 001 Definitions (Interpretation, s 4). Organisations must check and apply those definitions. Assuming ordinary language meanings for Level 3 Head or Level 3 group without consulting 3PS 001 is a risk.

• Broad scope of ITEs. The ITE definition includes on- and off-balance sheet exposures (s 6). Contingent liabilities, guarantees, and implicit support arrangements may therefore be captured. Entities that focus solely on balance-sheet items risk under-reporting exposures.

• Tight notification deadlines. The Level 3 Head must notify APRA "as soon as practicable, and no more than 10 business days" after becoming aware of breaches of ITE limits, significant breaches or material deviations from the ITE policy, or that the policy did not adequately address a material risk (s 18). Similar 10-business-day timing applies to submitting the ITE policy to APRA after Board approval (s 19). These are relatively short timeframes. Failure to meet them will invite supervisory escalation.

• APRA discretion on calculations. APRA may determine how a Level 3 Head must calculate ITEs (s 17). This means an entity’s internal measurement approach may be overridden, which creates measurement risk and operational complexity. Entities must be prepared to re-run calculations in a manner specified by APRA.

• APRA’s power to require reductions. APRA can require limits or reductions in ITEs where it considers exposure levels significant (s 17). That could force restructuring of intra-group funding, service arrangements or capital support, and can affect liquidity and capital planning.

• Written form for APRA decisions. Where APRA exercises a power or discretion under the Standard, it must be done in writing (s 5). Entities should expect formal written instruments rather than informal directions. Document management systems should capture and track such written decisions.

• Board-level approval for non-arms-length terms. Any intra-group terms inconsistent with arms-length terms require prior Level 3 Head Board approval with full documented justification (s 11). Operational teams that negotiate intra-group deals must build in time for board consideration and ensure documentation supports the justification.

• Service-provider contractual obligations. The Standard requires that written service agreements include an obligation on service providers to comply with any direction given by APRA in relation to operations of prudentially regulated institutions within the Level 3 group (s 14(e)). Existing contracts with third-party providers may not contain such clauses, and renegotiation may be necessary.

• Independent review requirement. The policy must be subject to independent review (s 12(a)). Entities must define the scope and independence of such reviews and ensure reviews are documented and actionable.

• Requirements to consider standalone risks when participating in group-wide operations. The Level 3 Head must consider risks to each prudentially regulated institution on a standalone basis when it participates in group-wide activities (s 14(a)). This can complicate decisions to centralise functions or share premises because the standalone risk impact must be shown to be acceptable and addressed.

• Potential for bespoke supervisory treatment. APRA can adjust or exclude specific requirements for a Level 3 Head (s 20), creating asymmetry across groups and making benchmarking with peers less straightforward.

• Footnote references not reproduced. Four footnotes are referenced in the text at key points (s 9, s 14(c), s 15, s 20). The absence of their content here could conceal important clarifications or qualifications. Practitioners should consult the full published Standard including footnotes.

In practice these provisions mean that compliance cannot be a narrow legal exercise; it requires integrated governance, operational, contractual and accounting workstreams and contingency planning for APRA-prescribed measurement or remedial actions.

To comply with this Prudential Standard an entity operating as a Level 3 Head should implement a structured programme covering governance, policy drafting, measurement, reporting, contractual remediation and supervisory engagement. Key steps, grounded in the Standard’s provisions, are the following.

1. Confirm scope and definitions

• Obtain and apply the definitions from Prudential Standard 3PS 001 Definitions to determine whether the entity is a Level 3 Head and which entities comprise the Level 3 group (Interpretation, s 4). Do not assume ordinary language meanings.

2. Draft the ITE policy and supporting documentation

• Draft a conceptually sound ITE policy that addresses all material ITE risks and that includes systems and procedures to identify, measure, monitor, evaluate, report and control or mitigate material risks (s 7).
• Ensure the policy is transparent, consistently implemented and subject to an independent review process (s 12(a)). Document the independence scope and reporting lines for that review.
• Ensure the policy captures on- and off-balance sheet exposures (s 6).
• Include limits on acceptable levels of ITEs for each Level 3 institution, referencing the institution’s Board-approved limits on exposures to unrelated institutions of broadly equivalent credit status and assessing the potential impact of a failure of any other institution on group capital and liquidity and the institution’s continued operation (s 12(c)(i)-(ii)).

3. Specify detailed procedures

• Document responsibilities and compliance obligations for the Level 3 Head Board, board committees and senior management in relation to ITE monitoring and management (s 12(d)(i)).
• Include escalation procedures to address policy breaches outside formal reporting cycles, and define thresholds and procedures for reporting material changes to the Board both inside and outside formal cycles (s 12(d)(ii), s 12(d)(vii)).
• Set out circumstances in which ITE limits may be exceeded and the authorities required to approve excesses (s 12(d)(iii)).
• Document conflict of interest procedures related to ITEs (s 12(d)(iv)).
• Document procedures for participation by prudentially regulated institutions in Level 3 group-wide operations and processes to ensure transparency of dealings with external entities associated with ITEs (s 12(d)(v), s 12(d)(vi)).
• Establish a timetable for regular Board review of ITE reports (s 12(d)(viii)).

4. Board approval and review

• Present the draft ITE policy to the Board of the Level 3 Head for approval, ensuring the Board documents its approval and the rationale (s 10(a)).
• Establish an annual Board review schedule for the ITE policy to ensure adequacy and appropriateness (s 10(d)).

5. Non-arms-length arrangements

• Where an individual prudentially regulated institution proposes intra-group terms that are not arms-length, require that those terms receive prior Board approval at the Level 3 Head, with full written justification documented (s 11). Build governance steps to capture and archive justifications.

6. Stress testing and scenario analysis

• Implement forward-looking scenario analysis and stress testing of material ITEs, assessing impacts on the group’s risk profile, capital strength and earnings, and document methodology and results (s 8). Ensure scenarios reflect market conditions and key risk factors.

7. Management information systems and reporting

• Integrate ITE reporting into management information systems so that on- and off-balance exposures can be measured, aggregated and reported across the Level 3 group (s 15).
• Prepare standardised report templates on material ITEs for Board review and for APRA on request (s 15-16).
• Implement procedures to provide reports on material ITEs to APRA promptly when requested (s 16).

8. Notification and submission timeframes

• Build processes to notify APRA as soon as practicable and no more than 10 business days after becoming aware of breaches of policy limits, significant breaches or material deviations, or policy inadequacies, including remedial action plans (s 18).
• Submit a copy of the ITE policy to APRA as soon as practicable and no later than 10 business days after Board approval (s 19). Implement tracking to ensure these timelines are met.

9. Group-wide operations and contracts

• For shared premises, centralised back-office functions or outsourcing to other Level 3 institutions, perform standalone risk assessments for each prudentially regulated institution (s 14(a)).
• Ensure written service agreements document dealings with other parties, address compliance with the ITE policy and include contractual clauses requiring service providers to comply with APRA directions with respect to operations of prudentially regulated institutions (s 14(c),(e)).
• Ensure contracts permit APRA access to required supervisory information where applicable (s 14(d)).

10. Prepare for supervisory measurement and intervention

• Be capable of recalculating ITEs according to methodologies APRA may prescribe, and maintain data and model transparency to facilitate such recalculations (s 17).
• Develop contingency plans to reduce or restructure intra-group exposures if APRA exercises its power to limit or reduce ITEs (s 17). Include liquidity and capital contingency measures.

11. Independent review and continuous improvement

• Schedule regular independent reviews of the ITE policy and its implementation (s 12(a)). Treat findings as inputs to policy refinement.
• Maintain a timetable and audit trail for policy amendments, Board reviews and reporting to APRA.

12. Engage with APRA and document written instruments

• Anticipate that APRA will exercise powers in writing (s 5). Create procedures to receive, log and act on written APRA instructions or determinations, and to preserve records of responses and remedial actions.

13. Legal and compliance alignment

• Review corporate governance, director duties and compliance frameworks to align Board obligations under the Standard (s 10) with legal obligations under corporations and other relevant laws.
• Review existing service contracts for clauses on regulatory compliance and APRA directions and renegotiate where necessary to insert required provisions (s 14(c),(e)).

14. Test and simulate operational responses

• Conduct periodic tabletop exercises simulating APRA requests for reports, notifications of breaches and scenarios requiring reductions of ITEs, to test internal escalation, Board engagement and contractual responses.

This compliance programme should be documented and owned at senior management level, with clear Board escalation and sign-off points. The Standard anticipates that the Level 3 Head will maintain both the policies and the operational capability to meet APRA’s reporting, assessment and remedial expectations.