APRA emphasises importance of written self-assessments for securitisations

Key Points:

Self-assessments for securitisation must be rigorous, of a high quality and consider economic substance over the form of the transaction.

On 18 November 2011, the Australian Prudential Regulation Authority re-emphasised, in an open letter to authorised deposit-taking institutions, the importance of compliance with the written self-assessment requirements for each securitisation in which the ADI participates and that these self-assessments must be rigorous, of a high quality and consider economic substance over the form of the transaction.

This requirement for self-assessment is provided for under paragraph 18 of Prudential Standard 120 Securitisation (APS 120) (paragraph 20 from 1 January 2012) and requires ADIs to demonstrate their compliance with APS 120.