The Australian Prudential Regulation Authority has finalised two new prudential standards covering recovery and exit planning, and resolution planning. The new standards, CPS 190 and CPS 900, will apply to banks, insurers and superannuation funds and are designed to strengthen their preparedness to deal with a crisis. APRA has been consulting on the new standards since late 2021. CPS 900 will come into effect in January next year and will be implemented on a case-by-case basis.  CPS 190 will come into effect in January 2024 for banks and insurers, and from January 2025 for super fund licensees. CPS 190 is designed to ensure that APRA-regulated entities have plans for responding to severe financial stress, including actions for restoring financial viability and orderly exit. APRA said CPS 190 is principles-based, rather than prescriptive, and a practice guide (CPG 190) includes examples of best practice. CPG 190 sets out the key components of a contingency plan, which are triggers for early identification of stress, governance arrangements, recovery actions, scenario analysis, assessment of recovery capacity and a communications strategy. Plans must be reviewed and updated regularly. CPS 900 requires large or complex entities to work with APRA in planning and pre-positioning to ensure APRA can resolve them after the entity has become non-viable. The standard sets out a framework for how APRA expects to engage with entities in developing and implementing a resolution plan, and the outcomes APRA is seeking to achieve. It makes clear that the development and implementation of a resolution plan will be a process that the entity will undertake with the regulator in control. It talks about entities meeting information requests, having the opportunity to provide feedback to APRA and regular assessments of the progress of a plan. And it says: “Under CPS 900, an entity must notify APRA if it intends to make changes to its business or operations that would create a material barrier to executing the resolution plan.” The standards may require entities to build additional loss-absorbing capacity.