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Financial Sector (Collection of Data) Bill 2001

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2001

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

SENATE

 

FINANCIAL SECTOR (COLLECTION OF DATA) BILL 2001

EXPLANATORY MEMORANDUM



This Explanatory Memorandum takes into account Government amendments and corrections

made by the House of Representatives to the Bill as introduced

(Circulated by authority of the Minister for Financial Services and Regulation,

the Hon ourable Joe Hockey, MP)

 

42554





Table of Contents

 

Table of Contents Contents                                                                                                         Page

 

O UTLINE utline ……… …… ………………………………………………………………………… …… . ….                                                                                                                                                                     1

FINANCIAL IMPACT STATEMENT………………………………………………………….…. 1

ABBREVIATIONS Abbreviations ……………………… …… ……………………………………………… . …… .. ………..                                                                                                                                                              .    2

REGULATION IMPACT STATEMENT…………… …… ……… ……………… ……… ……………… ……. . .                                                                                                                                                    …...    3

PROPOSED LEGISLATION………………………… …… ………………………… …… ……… …… .. …. ……….                                                                                                                       9 8 Table of Contents

 

 

 

 

 

 

 

 

 

 

 



 

 



 

1

Outline

1.1 1.1       This Bill transfers the  administration of the Financial Corporations Act 1974 from the Reserve Bank of Australia (RBA) to the Australian Prudential Regulation Authority (APRA) .

1.2 1.2       When APRA was established on 1 July 1998, it inherited a variety of data collection tools and analysis systems.  These tools and systems were tailored to meet the data needs of APRA’s predecessor organisations (Insurance and Superannuation Commission, R BA eserve Bank of Australia (RBA) , State Supervisory systems and Australian Financial Institution Commission).

1.3 1.3       This Bill aims to modernise and increase the relevance of data collections, thereby ensuring that APRA collects the data it requires for the purposes of its prudential functions.  The data APRA collects will also continue to facilitate the formulation of monetary policy by the RBA.  Secondly, it aims to harmonise and increase the flexibility of the data collections and publishing regimes , and finally, to have a central repository for the collection of financial data.  Overall, the proposed regulatory measures are designed to streamline and simplify the current data collection methods and systems.

1.4 1.4       The Bill covers the following broad areas:

·                 E e ntities covered by the Bill;

·                 t T he registration of corporations and the obligations on those corporations;

·                 t T he power for APRA to determine reporting standards that will require compliance with the standards through the provision of reporting documents by financial sector entities with the se standards through the provision of reporting documents ;  and

·                 t T he application of the Commonwealth’s criminal code to certain offences in this Bill.

Financial impact statement

1.5       It is not envisaged that t he Bill will have a financial impact on the operations of government.  The Australian Prudential Regulation Authority is self-funded through financial sector levies .



 

2

Abbreviations

The following abbreviations are used in this explanatory memorandum.

ABA

Australian Bankers’ Association

ABS

 —

Australian Bureau of Statistics

ADI

Authorised Deposit-taking Institution

APRA

Australian Prudential Regulation Authority

APRA Act

Australian Prudential Regulation Authority Act 1998

Banking Act

Banking Act 1959

FCA

Financial Corporations Act 1974

ISC

Insurance and Superannuation Commission

NOHC

 —

Non-operating holding company

ORR

Office of Regulation Review

RBA

Reserve Bank of Australia

Reserve Bank Act

Reserve Bank Act 1959

RIS

Regulation Impact Statement

RSA Act

Retirement Savings Account s Act 1997

SIS Act

Superannuation Industry (Supervision) Act 1993



3

Regulation Impact Statement

Problem identification

3.1       The Australian Prudential Regulation Authority (APRA) was established on 1 July 1998 as the single integrated, prudential regulator of banks, insurance companies, building societies, credit unions, friendly societies and superannuation funds.  APRA’s primary role is to protect the interests of depositors, insurance policy holders and superannuation fund members.  It does this through a variety of methods including through licensing institutions and implementing risk management requirements. 

3.2       To understand the condition of financial institutions and to monitor their compliance with prudential requirements, APRA gathers detailed financial data from the entities it supervises through financial reporting requirements.  This data is more frequent, and in some respects more detailed, than general purpose reporting (eg. accounting standards) and continuous disclosure (eg. Corporations Law) which are aimed mainly at listed companies to inform the marketplace.  The collection of APRA’s financial reporting data also enables general research and analysis to be undertaken into the trends and pressures affecting the financial sector and the publication of relevant information.

3.3       On establishment, APRA inherited a variety of data collection tools and analysis systems.  These tools and systems were tailored to meet the data needs of APRA’s predecessor organisations.  Three problems have been identified with this inherited data collection framework. 

3.4       First, the existing data collection framework is fragmented, cumbersome and in some areas outdated.  APRA collects 153 forms, comprising 17,000 data items.  In some cases the data collected is inadequate or no longer relevant to the performance of APRA’s functions.  For example, the current tools do not permit APRA to collect data about conglomerate groups and industry sub-sectors.  In addition, in this ‘information age’ the current collection framework provides no incentives for institutions to provide data in a timely manner.

3.5       The second problem concerns the inflexibility and inconsistency of the current data collection and publishing powers.  APRA’s current data collection works in conjunction with its data publishing powers and both are contained in a variety of industry-specific legislation and regulation including: the Banking Act 1959 , Insurance Act 1973 , Life Insurance Act 1995 , Superannuation Industry (Supervision) Act 1993 , Retirement Savings Account Act 1997 and the Australian Prudential Regulation Authority Act 1998 .  Changes to APRA’s data collection and publishing powers can only be made by changes to such legislation and associated regulations.  This is a lengthy process and has meant that APRA’s data collection and publishing tools have failed to keep pace with rapid industry development and the demand for current financial sector information.  This situation is inconsistent with APRA’s aims to streamline and harmonise supervisory and information requirements across APRA supervised institutions.

3.6       Finally, the current situation means that there is a significant overlap in reporting duties imposed on entities to provide similar data to different government agencies such as APRA, the Reserve Bank of Australia (RBA) and the Australian Bureau of Statistics (ABS).

3.7       The ABS also collects an array of data from financial institutions under the Census and Statistics Act 1905 , some of these data items are the same or similar to the data needed to be collected by APRA.  There is an opportunity for coordination and rationalisation.

Objectives

3.8       The proposed regulatory measures are designed to streamline and harmonise information requirements across APRA supervised institutions, and to modernise and increase the relevance of financial data, cost effectively.

Identification of options

Option 1 - Amendments to current financial sector data collection powers

3.9       A modernised and harmonised set of financial sector data - - collection powers could be inserted into a new Act based on the the Financial Corporations Act 1974 .  Under this option, the responsibility for collecting information required by the RBA for monetary policy and related purposes under the Financial Corporations Act would be transferred to APRA under the new Act.  Similarly, consequential amendments would need to be made to the Banking Act 1959, Insurance Act 1973, Life Insurance Act 1995, Superannuation Industry (Supervision) Act 1993 and Retirement Savings Account Act 1997 and regulations to repeal the current data collection powers.  Under the revamped Financial Corporations Act 1974 , APRA would retain the current power to impose financial penalties on institutions that fail to provide data in a timely manner.  In addition, it will have power to publish data received from institutions, except for data flagged as ‘commercial-in-confidence’ or ‘public interest-in-confidence’ by APRA after consultation with industry.  The data collected under this Act will be able to be passed to the RBA and ABS for the purposes of their own monetary policy and statistical requirements, respectively.

Option 2 - No specific action

3.10     Under this option, no measures would be introduced, and APRA regulated financial institutions would continue to provide data according to the financial reporting requirements under the current legislation. 



Impact analysis

Impact group identification

3.11     The main groups likely to be affected by the proposed amendments are: financial institutions regulated by APRA, financial institutions regulated under the Financial Corporations Act 1974 (eg. merchant banks and finance companies), APRA, the RBA, the ABS and users of financial services.

Assessment of costs and benefits

Option 1 - Proceed with legislative amendments

3.12     The proposed amendments will benefit all of the parties identified as being affected by the proposed changes.



 

Financial Institutions

3.13     Financial institutions will benefit from a more streamlined collection process.

3.14     Under the proposed legislation, improved data submission mechanisms (for example, secure website submission in addition to the current disk and email submission - which can be easily corrupted and are time-consuming, particularly for download of many data sets  — - improved system speed and a data integrity process) and a reduction in the frequency of certain key collections will contribute to a decrease in the amount of data required to be provided in total to APRA, the RBA and ABS, leading to a reduction in the compliance costs and time required to fulfil data providing duties.  Financial institutions will not have to spend valuable time providing similar data to RBA, ABS and APRA; instead, APRA will be the central data collection repository.

3.15     Under the proposed legislation, modernised and harmonised collections amongst APRA, RBA and ABS will contribute to easier compliance with APRA’s requests for data, as these will be more commercially aligned.  Harmonising each of the data collections that APRA is responsible for with the public disclosure requirements of provider institutions and with the financial collections of the ABS and RBA will make it simpler for institutions to comply.

3.16     Implementation of a well understood annual change cycle.  As data requirements are generally stable for several years at a time, with only minor additions needed over the short term, it is proposed that a rolling review of all data items be undertaken.  This would entail a complete reassessment of data requirements by APRA, RBA and ABS and a rationalisation of data collection using, wherever possible, the same conceptual framework.  This process (involving industry consultation and reasonable lead times) will enable institutions to comply with APRA’s request for data in a measured and timely manner and add certainty as to what data is required.

3.17     The ability to examine industry data collected by APRA and selectively use this data as a basis for comparison with other institutions or sectors of the financial system (peer groups) will benefit the industry directly and analysts more broadly by facilitating greater market transparency leading to better informed commercial decisions.

3.18     The costs associated with the proposed amendments are not easily measurable.  Financial institutions will initially face some transitional costs as a result of having to provide data to APRA in a different form.  However, given that one of the aims of the amendments is to closely mirror the way APRA collects data with the way that financial institutions report their business activities, these costs should be modest.  Further, the disciplined review cycle means future data changes will follow a predictable process with adequate industry consultation and lead times.  In the long term, the benefit in cost savings to financial institutions will be substantially greater than the initial costs incurred.

APRA

3.19     APRA will benefit from the proposal through an increased ability to collect data required to effectively perform its supervisory functions.  For example:

·                 a single reporting and analysis platform across industries;

·                 new risk rating and improved exception reporting arrangements;

·                 more efficient and effective offsite analysis tools for APRA front line supervisors;

·                 better collection and analysis of data across conglomerate groups and industry sub-sectors; and

·                 where APRA has specific concerns about a financial institution, APRA will be able to more effectively gather information from that institution in a more timely manner.

3.20     In addition, the proposed amendments will provide industry with an incentive to comply with APRA’s request for data.  It also encourages prudent practice amongst institutions by ensuring that they examine their activities in a similar manner to that of the supervisor.  The proposed amendments will also facilitate the continued development of a cooperative relationship between APRA and industry.

3.21     The costs to APRA in the development and deployment of integrated data systems together with the associated staff training necessary to allow efficient analysis of the different industry data sets are substantial.  The Statistics Project is utilising a range of internet based secure communications technologies, together with high end Oracle data warehouse and business intelligence tools.  Consulting costs associated with the project are substantial.   The analysis functionality available to APRA analysts will be substantially in advance of anything previously available to prudential supervisors.   However, the technology investment provides a long-term solution to a problem involving substantially out of date, disparate, data collection and analytical systems.  It is important to realise that the systems being replaced are reaching the end of their useful life and, although the costs of the Statistics Project are substantial, the difference between these costs and the costs of maintaining and eventually updating the existing systems is marginal.  The long term benefits, including better access to data and more efficient regulation, leading to better prudential oversight of the financial industry, will far outweigh the initial investment.  Furthermore, unquantifiable but real benefits will accrue to the users of financial services through including greater confidence in financial services, greater safety for investors and , a stronger financial sector industry which might lead to higher share prices and greater consumer wealth .

ABS and RBA

3.22     The amendments will benefit the RBA and ABS through:

·                 more efficient and rationalised data collection methods; resulting in

·                 reduced staff and systems costs that are duplicating processes already undertaken by APRA; and

·                 allowing resources to be concentrated on improved analysis activities.

3.23     The costs associated with the proposed amendments to the ABS and RBA will be negligible.  APRA is currently negotiating a user-pays agreement for the provision of data to the ABS and RBA.  While final costs to these agencies is yet to be agreed it should build in the savings realised by rationalising the data collection system.

3.24     Financial institutions will continue to be included in ABS collections where the subject matter, or the detail, is not required by, or of interest to, APRA or RBA for their purposes.

Option 2 - No specific action

3.25     The benefit will be short term savings, through avoiding initial outlays to improve systems and staff training, but there will be no long term benefit and it is estimated there will be the following long term costs:

·                 for APRA, an ageing set of systems and forms which will become increasingly difficult to maintain and increasingly outmoded in content ;

·                 a continued burden on financial institutions to provide similar data to different government bodies; and

·                 a continued duplication of government processes and resources.

3.26     Also, in the absence of reform to streamline APRA's data collection powers, to obtain the relevant information APRA will need to rely on more indirect methods such as licensing, capital, audits and inspections.  Tasking frontline supervisors to put a disproportionate store on these other prudential techniques is staff resource intense and could diminish APRA’s standing and credibility within the regulatory community and the financial marketplace.

Consultation

3.27     Consultation on the content of the Financial Sector (Collection of Data) Bill 2001 and Financial Sector (Collection of Data — Consequential and Transitional Provisions) Bill 2001 involved representative bodies including the Australian Bankers’ Association, International Banks and Securities Association of Australia, Credit Union Services Corporation (Australia) Limited, National Credit Union Association Inc., Australian Association of Permanent Building Societies, Australian Friendly Societies Association, Australian Superannuation Funds Association, Australian Institute of Superannuation Trustees, Insurance Council of Australia, Australian Equipment Lessors Association Inc, Investment & Financial Services Association Limited and the Industry Funds Forum.

3.28     Consultations were largely positive, particularly in the banking sector, although a few refinements to the legislation were suggested by the superannuation sector partly reflecting factors specific to this sector.  These suggestions have been taken into account through the Government amendments to the legislation.

3.29     Similarly, the Australian Securities and Investments Commission, the Australian Taxation Office, RBA and ABS are supportive of the proposed amendments.  The RBA and ABS fully support that APRA should be the central collection point for most financial data from the finance sector.

Conclusion and recommended option

3.30     Option 1 will modernise and increase the relevance of data collections by developing a flexible framework to accommodate financial sector data collection and provide an opportunity to review the current data collections, some of which is historical data collection and serves no real prudential purpose now.  Streamlining and harmonising industry Acts into a single data collection Act and the use of reporting standards will ensure the flexibility of data collection and publication to keep pace with financial sector innovation and developments.

3.31     Given substantial benefits will be provided to all parties affected by the proposed amendments, and that the long term costs to all of the parties will be minimal, Option 1 is the preferred option.  The proposed amendments are necessary to remedy the current deficiencies in the data collection system.

Implementation and review

3.32     It is proposed that the Financial Corporations Act 1974 be amended so that APRA will act as a single Government collection agency for the financial sector.  It is also proposed that this Act be renamed the Financial Sector (Collection of Data) Act 2001 .   The Financial Sector (Collection of Data — Consequential and Transitional Provisions ) Bill will consequentially amend all of APRA’s industry supervision Acts to remove data collection provisions.  All current data collection powers in the industry specific legislation will be transferred and harmonised into this new Act.

3.33     It is proposed that a rolling review of all data items be undertaken entailing a complete reassessment of data requirements by APRA, RBA and ABS and a rationalisation of data collection and to use, wherever possible, the same conceptual framework. 

3.34     In addition, the detailed regulatory standards will be introduced progressively over the next two to three years, beginning with the authorised deposit-taking institution (ADI) sector on a date to be fixed by Proclamation .  APRA will continue to hold in depth consultations with industry groups on the regulatory standards before they are introduced.  

 

Regulation Impact Statement

DRAFT REGULATION IMPACT STATEMENT

Problem identification

The Australian Prudential Regulation Authority (APRA) was established on 1 July 1998 as the single integrated, prudential regulator of banks, insurance companies, building societies, credit unions, friendly societies and superannuation funds.  APRA’s primary role is to protect the interests of depositors, insurance policy holders and superannuation fund members.  It does this through a variety of methods including through licensing institutions and implementing risk management requirements. 

To understand the condition of financial institutions and to monitor their compliance with prudential requirements, APRA gathers detailed financial data from the entities it supervises through financial reporting requirements.  This data is more frequent, and in some respects more detailed, than fr om general purpose reporting (eg. accounting standards) and continuous disclosure (eg. Corporations Law) which are aimed mainly at listed companies to inform the marketplace.  The collection of APRA’s financial reporting data also enables general research and analysis to be undertaken into the trends and pressures affecting the financial sector and the publication of relevant information.

On establishment, APRA inherited a variety of data-collection tools and analysis systems.  These tools and systems were tailored to meet the data needs of APRA’s predecessor organisations.  Three problems have been identified with this inherited data-collection framework. 

First, the existing data-collection framework is fragmented, cumbersome and in some areas outdated.  APRA collects 153 forms, comprising 17,000 data items.  In some cases the data collected is inadequate or no longer relevant to the performance of APRA’s functions.  For example, the current tools do not permit APRA to collect data about conglomerate groups and industry sub-sectors.  In addition, in this ‘information age’ the current collection framework provides no incentives for institutions to provide data in a timely manner.

The second problem concerns the inflexibility and inconsistency of the current data-collection and publishing powers.  APRA’s current data-collection works in conjunction with its data publishing powers and both are contained in a variety of industry-specific legislation and regulation:  including the Banking Act 1959, Insurance Act 1973, Life Insurance Act 1995, Superannuation Industry (Supervision) Act 1993, Retirement Savings Account Act 1997 and the Australian Prudential Regulation Authority Act 1998.  Changes to APRA’s data-collection and publishing powers can only be made by changes to such legislation and associated regulations.  This is a lengthy process and has meant that APRA’s data-collection and publishing tools have failed to keep pace with rapid industry development and the demand for current financial sector information.  This situation is inconsistent with APRA’s aims to streamline and harmonise supervisory and information requirements across APRA supervised institutions.

Finally, the current situation means that there is a significant overlap in reporting duties imposed on entities to provide similar data to different government agencies.  That is, to APRA, the Reserve Bank of Australia (RBA) and the Australian Bureau of Statistics (ABS).

Under While there is the FCA Act , and that under this Act, data is formally provided to the RBA, even though it is actually collected by APRA collect .  Further , the ABS also collects data on financial statistics , which overlaps under the ABS Act which overlaps with data colected collected under the FCA Act .

[ Currently the RBA collects essential financial information under the FCA Act for non-APRA regulated entities.  The ABS also receives similar financial statistics from non-APRA regulated entities and APRA regulated entities.  It therefore is logical to have one central collection and repository for financial sector data. ] - APRA Comments [Redraft]

Objectives

The objectives of the proposed regulatory measures are three-fold.  First, to modernise and increase the relevance of data collections, thereby ensuring that APRA collects the data it requires for the purposes of its prudential functions.  Secondly, to harmonise and increase the flexibility of the data-collections and publishing regimes and finally, to have a central repository for the collection of financial data.  Overall, the proposed regulatory measures are designed to streamline and simplify the current data-collection methods and systems.

Identification of options

Option 1 - Amendments to current financial sector data collection powers

A modernised and harmonised set of financial sector data-collection powers could be inserted into a renamed Financial Corporations Act 1974 .  Under this option, the responsibility for collecting information required by the RBA for monetary policy and related purposes under the Financial Corporations Act , would be transferred to APRA.  Similarly, consequential amendments would need to be made to the various industry Acts and regulations to repeal the current data-collection powers.  Under the revamped Financial Corporations Act , APRA would retain the current power to impose financial penalties on institutions that fail to provide data in a timely manner.  In addition, it will have power to publish data received from institutions, except for data flagged as ‘commercial in confidence’ or ‘public interest in confidence’ by APRA after consultation with industry.

As data requirements are generally stable for several years at a time, with only minor additions needed over the short-term, it is proposed that a rolling review of all data items be undertaken.  This would entail a complete reassessment of data requirements by APRA, RBA and ABS and justification of both new and existing data items in terms of ownership and the final use of that data.  In effect, a “sunset clause” would be imposed on each data item.

Option 2 - No specific action

Under this option, no measures would be introduced, and APRA regulated financial institutions would continue to provide data according to the financial reporting requirements under the current legislation.  The compliance burden would remain higher than necessary, overlap in data collections would remain, the information would remain disparate, and superfluous data collections would remain in place.

Impact analysis

Impact group identification

The main groups likely to be affected by the proposed amendments are: financial institutions regulated by APRA, financial institutions regulated under the Financial Corporations Act 1974 (eg merchant banks and finance companies), APRA, the RBA and ABS.

Assessment of costs and benefits

Option 1 - Proceed with legislative amendments

The proposed amendments will benefit all of the parties identified as being affected by the proposed changes.

Financial Institutions

Financial institutions will benefit from a more streamlined collection process.

· Improved data submission mechanisms and a reduction in the frequency of certain key collections will contribute to a substantial decrease in the amount of data required to be provided in total to APRA, the RBA and ABS, leading to a reduction in the compliance costs and time required to fulfil data providing duties.  Financial institutions will not have to spend valuable time providing similar data to RBA, ABS and APRA; instead, APRA will be the central data collection repository.

· Modernised and harmonised collections amongst APRA, RBA and ABS will contribute to easier compliance with APRA’s requests for data, as these will be more commercially aligned.  Harmonising each of the data collections that APRA is responsible for with the public disclosure requirements of provider institutions and with the financial collections of the ABS and RBA will make it simpler for institutions to comply.

· Implementation of a well understood annual change cycle (involving industry consultation and reasonable lead times) and certainty as to what data is required.  Flowing from this will be the ability for institutions to comply with APRA’s request for data in a measured and timely manner.

· The ability to examine industry data collected by APRA and selectively use this data as a basis for comparison with other institutions or sectors of the financial system (peer groups) will also benefit the industry directly and analysts more broadly.

The costs associated with the proposed amendments are not easily measurable.  A small number of financial institutions may initially face some transitional costs as a result of having to provide data to APRA in a different form.  However, given that one of the aims of the amendments is to closely mirror the way APRA collects data with the way that financial institutions report their business activities, these costs should be modest.  Further, the disciplined review cycle means future data changes will follow a predictable process with adequate industry consultation and lead times.  In the long term, the benefit in cost savings to financial institutions will be substantially greater than the initial costs incurred.

APRA

APRA will benefit from the proposal through an increased ability to collect data required to effectively perform its supervisory functions.  For example:

· a single reporting and analysis platform across industries;

· new risk rating and improved exception reporting arrangements;

· more efficient and effective offsite analysis tools for APRA front line supervisors;

· APRA will be able to collect and analyse data across conglomerate groups and industry sub-sectors; and

· where APRA has specific concerns about a financial institution, APRA will be able to more effectively gather information from that institution in a more timely manner.

In addition, the proposed amendments will provide industry with an incentive to comply with APRA’s request for data.  It also encourages prudent practice amongst institutions by ensuring that they examine their activities in a similar manner to that of the supervisor.  The proposed amendments will also facilitate the continued development of a cooperative relationship between APRA and industry.

It is envisaged that the costs to APRA will be substantial in the initial set up of systems and staff training required to collect and analyse the different data.  However, the amendments provide for a long-term solution to a problem that involves disparate data-collection and analytical systems, the long term benefits will far outweigh the initial start-up costs.

ABS and RBA

The amendments will benefit the RBA and ABS through:

· reducing staff and systems costs that were duplicating processes already undertaken by APRA;

· more efficient and rationalised data collection methods; and

· allowing duplicated resources to be concentrated on other core activities.

The costs associated with the proposed amendments to the ABS and RBA will be negligible.

Option 2 - No specific action

The major costs of not taking any action to address these problems are:

· for APRA, an ageing set of systems and forms which will become increasingly difficult to maintain and increasingly outmoded in content;

· a continued burden on financial institutions to provide similar data to different government bodies; and

· a continued duplication of government processes and resources.

Under this option, APRA and financial institutions would benefit through avoiding initial outlays to improve systems and undertake staff training to adapt to the new data-collection systems.

Also, in the absence of reform in the area, APRA frontline supervisors will need to put disproportionate store on other prudential techniques such as licensing, capital, audits and inspections which are staff resource intense.  APRA’s standing and credibility within the regulatory community and the financial marketplace could diminish.

Consultation

APRA has consulted extensively with the banking industry (both regional and in Sydney and Melbourne), via presentations and one-on-one meetings on the proposed changes to the banking collections.  Highly positive reactions were received with significant support for the overall objectives of modernisation and rationalisation.  Banks are particularly enthusiastic about the possibility of reducing the frequency of reporting in some cases and the dropping of outmoded content in others.

Consultation has already taken place with all major industry bodies including Australian Superannuation Funds Association (ASFA) , Australian Bankers Association (ABA) , Investment & Financial Services Association Limited (IFSA) , Credit Union Services Corporation (Australia) Limited (CUSCAL) and the International Bank s and Securities Association (IBSA) .  All industry bodies consulted are supportive of the proposed changes.

Similarly, the Australian Securities and Investments Commission, the Australian Taxation Office, RBA and ABS are supportive of the proposed amendments.  The RBA and ABS fully support that APRA should be the central repository for the collection of financial sector data.

Conclusion and recommended option

Given substantial benefits will be provided to all parties affected by the proposed amendments, and that the costs to all of the parties will be minimal, Option 1 is the preferred option.  The proposed amendments are necessary to remedy the current deficiencies in the data-collection system.

Implementation

It is proposed that the Financial Corporations Act 1974 be amended so that APRA will act as a single Government collection agency for the financial sector.  It is also proposed that this Act be renamed the Financial Sector (Collection of Data) Act 2001 . The Financial Sector (Collection of Data) Bill will consequentially amend all of APRA’s industry supervision Acts to remove data collection provisions.  All current data collection powers in the industry specific legislation will be transferred and harmonised into this new Act.

3.1    

3.2    

3.3     3.4     3.5     3.6     3.7     3.8     3.9     3.10  

3.11   3.12  

3.13   Financial institutions will benefit from a more streamlined collection process.

3.14   Under the proposed legislation, improved data submission mechanisms (for example, secure website submission in addition to the current disk and email submission - which can be easily corrupted and are time-consuming, particularly for download of many data sets - improved system speed and a data integrity process) and a reduction in the frequency of certain key collections will contribute to a decrease in the amount of data required to be provided in total to APRA, the RBA and ABS, leading to a reduction in the compliance costs and time required to fulfil data providing duties.  Financial institutions will not have to spend valuable time providing similar data to RBA, ABS and APRA; instead, APRA will be the central data collection repository.

3.15   Under the proposed legislation, modernised and harmonised collections amongst APRA, RBA and ABS will contribute to easier compliance with APRA’s requests for data, as these will be more commercially aligned.  Harmonising each of the data collections that APRA is responsible for with the public disclosure requirements of provider institutions and with the financial collections of the ABS and RBA will make it simpler for institutions to comply.

3.16   Implementation of a well understood annual change cycle.  As data requirements are generally stable for several years at a time, with only minor additions needed over the short term, it is proposed that a rolling review of all data items be undertaken.  This would entail a complete reassessment of data requirements by APRA, RBA and ABS and a rationalisation of data collection and to use, wherever possible, the same conceptual framework.  This process (involving industry consultation and reasonable lead times) will enable institutions to comply with APRA’s request for data in a measured and timely manner and add certainty as to what data is required.

·                    3.17   The ability to examine industry data collected by APRA and selectively use this data as a basis for comparison with other institutions or sectors of the financial system (peer groups) will benefit the industry directly and analysts more broadly by facilitating greater market transparency leading to better informed commercial decisions.3.18      Financial institutions will benefit from a more streamlined collection process.

·                    Under the proposed legislation, improved data submission mechanisms (for example, secure website submission in addition to the current disk and email submission - which can be easily corrupted and are time-consuming, particularly for download of many data sets - improved system speed and a data integrity process) and a reduction in the frequency of certain key collections will contribute to a decrease in the amount of data required to be provided in total to APRA, the RBA and ABS, leading to a reduction in the compliance costs and time required to fulfil data providing duties.  Financial institutions will not have to spend valuable time providing similar data to RBA, ABS and APRA; instead, APRA will be the central data collection repository.

·                    Under the proposed legislation, modernised and harmonised collections amongst APRA, RBA and ABS will contribute to easier compliance with APRA’s requests for data, as these will be more commercially aligned.  Harmonising each of the data collections that APRA is responsible for with the public disclosure requirements of provider institutions and with the financial collections of the ABS and RBA will make it simpler for institutions to comply.

·                    Implementation of a well understood annual change cycle.  As data requirements are generally stable for several years at a time, with only minor additions needed over the short term, it is proposed that a rolling review of all data items be undertaken.  This would entail a complete reassessment of data requirements by APRA, RBA and ABS and a rationalisation of data collection and to use, wherever possible, the same conceptual framework.  This process (involving industry consultation and reasonable lead times) will enable institutions to comply with APRA’s request for data in a measured and timely manner and add certainty as to what data is required.  

·                    The ability to examine industry data collected by APRA and selectively use this data as a basis for comparison with other institutions or sectors of the financial system (peer groups) will benefit the industry directly and analysts more broadly by facilitating greater market transparency leading to better informed commercial decisions.

 

 

3.19   3.20   3.21  

2.1                    3.22   The amendments will benefit the RBA and ABS through: The amendments will benefit the RBA and ABS through:

3.23   3.24   3.25   3.26   3.2 7    3.2 8    3.2 9    3. 30    3.3 1    3.3 2    3.3 3   



 

4

Proposed legislation

Part 1  — Preliminary

Clause 1 ¾ Short title

4.1       Upon enactment, the Bill will be know n as the Financial Sector (Collection of Data) Act 2001 .

Clause 2 ¾ Commencement

4.2       This clause provides for commencement of the Bill (other than Parts 2, 3 and 4) on the day on which the Bill receives the Royal Assent.

4.3               4.3  Parts 2 , 3 and 4 which relate to the registration of companies, the provision of documents and miscellaneous provisions, commence on a day to be fixed by Proclamation . ,

4.4       This clause ensures that Parts 2, 3 and 4 commence no later than 12 months after the Act receives Royal Assent.

Clause 3 ¾ Object of Act

4.4 4.5       The object is self-explanatory.  It enables APRA to collect data to reflects the intention of the Act Bill to transfer the responsibility for collecting data from the Reserve Bank of Australia (RBA) to the Australian Prudential Regulation Prudential Authority (APRA).  The collection of data by APRA will assist it in its role as Australia’s prudential regulator as well as facilitating the formulation of monetary policy of the by the RBA of monetary policy .

Clause 4 ¾ Extension to external Territorie Object of Act s

4.5 4.6       This extension of the Act Bill to external T t erritories is designed to ensure that the provisions of this Act Bill extends to all Territories.

Clause 5 ¾ Entities covered by the Act

4.5 4.7       This clause defines financial sector entities.  For the purposes of this Bill, financial sector entities are either registered or regulated entities.  A registered entity is a corporation whose name is entered in the Register of Entities kept by APRA under clause 8 of this Bill.  A regulated entity is any of:  a body regulated by APRA (within the meaning of subsection 3(2) of the Australian Prudential Regulation Authority Act 1998 ; a supervised body corporate within the meaning of section 49A of the Insurance Act 1973 ; a subsidiary of an ADI, or of an authorised NOHC, within the meaning of the Banking Act 1959 ) .

Clause 6 ¾ Application of Criminal Code

4.5 4.8       Chapter 2 of the Criminal Code will be applied to this Bil Ac l t .



Part 2  — Registration of c C orporations

Clause 7 ¾ Registrable corporations

4.9       Registrable corporations are defined in this clause.

Clause 8 ¾ Register of entities

4.10     APRA must keep a Register of Entities for the purposes of this Act Bill which is available for inspection by the public at an APRA office during business hours.  The contents of the Register are public and a person is able to inspect the register and make a copy of, or make an extract from, the Register subject to a fee (if any) prescribed by regulation.

Clause 9 ¾ Obligations of corporations

4.11     Subclause (1) requires a registrable corporation to which this Part applies on commencement, to furnish to APRA, within 60 days after the commencement of this Part, certain documents mentioned in subclause (5). 

4.12     This clause also makes it an offence if an entity fails to meet this requirement . subject to a penalty of 50 penalty units a day.  The offence carries a penalty of 50 penalty units a per A penalty of 50 penalty units is applied for each day the documents are not furnished.  The subclause also inserts a note after the subclause drawing attention to the continuing obligation on an entity under section 4K of the Crimes Act 1914 to provide the documents to APRA.

4.13     Subclause (2) imposes a similar requirement as under subclause (1) to provide documents to APRA but applies to corporations who become a registrable corporation after the commencement of this Part.  This clause also makes it an offence to fail to provide such documents as required with a penalty of 50 penalty units.  A penalty of 50 penalty units is applied for each day the documents are not furnished.   units a per day.   The subclause also inserts a note after the subclause drawing attention to the continuing obligation on an entity under section 4K of the Crimes Act 1914 to provide the documents to APRA.

4.14     Subclause (3) provides that before the expiration of the 60 day limit, APRA may grant a corporation an extension of time in which to furnish the documents.

4.15     Subclause (4) states that a corporation need not furnish the documents, if within the 60 days or such other period as APRA has permitted, the Act Bill ceases to apply to the corporation.  This subclause also inserts a note drawing attention to the legal burden on a defendant in relation to the matters in the subclause.

4.16     Subclause (5) outlines the documents that need to be furnished to APRA under subclauses (1) and (2).

4.17     Subclause (6) provides that a registered corporation is to inform APRA, in writing, of any change in the information contained in the documents furnished to APRA.   Failure by a registered corporation to provide such information as required is an offence, subject to a penalty of 10 penalty units .  A penalty of 10 penalty units is applied for each day the documents are not furnished. .   This subclause also inserts a note a note after the subclause drawing attention to the continuing obligation on an entity under section 4K of the Crimes Act 1914 to provide the documents to APRA.  A penalty of 1 0 penalty units is applied for each day the documents are not furnished.

4.18     Subclause (7) provides that a corporation is not required to furnish any information already provided by a related corporation.  This subclause also inserts a note drawing attention to the legal burden on a defendant in relation to the matters in the subclause.

4.19     Subclause (8) requires that a statement or notification by a corporation to APRA must be signed by a senior officer of the corporation.

4.20     Subclause (9) provides for APRA to furnish documents provided under this clause to the Secretary of the Department of Treasury upon request.

4.21     Subclause (10) makes an offence against subclauses (1), (2) or (6) an offence of strict liability.

Clause 10 ¾ Matters to be included in Register of Entities

4.22     APRA is to keep a Register of the entities that have furnished the required documents and is to alter the register i n s accordance with information subsequently provided by the corporation.

4.23     APRA is not required to remove the name of a corporation from the Register upon request unless unless the corporation is no longer subject to this legislation.

4.24     This provision is based on subsection 9(c) of the Financial Corporations Act 1974 .  Currently no personal information is collected from entities under this provision and there is no intention to undertake collection of personal information.

Clause 11 ¾ List of names and categories of registered entities

4.25     Subclause (1) provides that APRA must keep a list of the names of registered entities, divided into categories as APRA determines. Historically, registered entities were divided into categories to assist in the formulation of information for monetary aggregate purposes.  Since then , these categories have been used by other pieces of legislation as a basis for exempting or including entities within categories from particular requirements. This provision is based on subsection 9(c) of the Financial Corporations Act 1974 .  Currently no personal information is collected from enti ties under this provision and there is no intention to undertake collection of personal information.

4.26     Subclause (2) provides that APRA may vary the list to keep it up to date, including assessing the appropriate category for a corporation.

4.27    

Clause 11 ¾ List of names and categories of registered entities

Subclause (1) provides that APRA must keep a list of the names of registered entities, divided up into categories as APRA determines. Historically, registered entities were divided into categories to assist in the formulation of information for monetary aggregate purposes.  Since then these categories have been used by other pieces of legislation as a basis for exempting or including entities within categories f rom particular requirements. [see sue bromley’s comment about providi

 

S ubclause (2) provides that APRA may vary the list to keep it up to date, including assessing the appropriate category for a corporation.

APRA is required to publish the list, variations of the list or any replacement of the list in the Gazette (subclauses (4) and (5)).  APRA may vary the list to keep it up to date (subclause (5)).  A corporation can also ask APRA to review its categorisation on the basis of new information and APRA is required to undertake such a review, when requested (subclause (7)).

 

Subclause (3) outlines the matters that APRA must have regard to in determining what category the corporation should be recorded under.  APRA is to have regard to the assets and liabilities of the corporation, the principal methods of borrowing and lending and is to endeavour to ensure that, as far as practicable, corporations carrying on the same or similar kinds of business are included in the same category.

Subclause (4) requires APRA to publish a copy of the list, or any variation of it, in the Gazette .

Subclause (5) requires APRA to publish a new list, if one is prepared to replace the existing list, and any variations made to that list in the Gazette .

Subclause (6) requires APRA to notify a corporation as soon as practicable of it being included in a category or transferred fo r m one category to another category. 

Subclause (7) allows a corporation to request APRA to review its categorisation on the basis of new information provided by it.  APRA shall then review the corporation’s categorisation and if APRA considers it appropriate, transfer the corporation to a different category and vary the list accordingly. 

This provision has been transferred directly from the Financial Corporations Act 1974.

[The main concern, if any, would be a financial corporation being described in the category of a ‘finance company’ instead of a ‘merchant bank’.  They are still able to seek review in the Federal Court or Magistrates Court].



Part 3  — Provision of Documents to APRA

Division 1  — Deferred application of this Part in relation to registered entities

Clause 12 — Application

4.28     This clause notes that Part 3 does not apply to registered entities until Part 2 commences by proclamation .   It is the intention that registered entities will continue to comply with their requirements under the Financial Corporations Act 1974 until APRA has the systems in place to transfer the data collection and associated responsibilities from the R eserve B ank of A ustralia .   When the systems are in place, Part 2 (and therefore Part 3) will commence on proclamation .



Division 2  - Determination of reporting standards and requirement to provide documents

Clause 1 3 2 — APRA may determine reporting standards for, and require provision of, certain documents

4.29     This provision enables APRA to specify, in writing, reporting standards to be complied with by financial sector entities registered under this Bill with financial documents relating to the business or activities of entities outlined in sub clauses sections 1 3 2 (1)(a)(i) and (ii).  APRA can publish these reporting standards in any way it considers appropriate to maintain flexibility in dealing with financial sector developments.

4.30     Subclause (1) also inserts a note dealing with APRA’s power to revoke or vary a standard.  Under subclause (1)(a), the fact that the power to determine the standard has to be exercised in writing will attract the operation of subsection 33(3) of the Acts Interpretation Act 1901 .

2.1                         4.31          Subclause (1) also inserts a note dealing with APRA’s power to revoke or vary a standard.  Under subclause (1)(a), the fact that the power to determine the standard has to be exercised in writing will attract the operation of subsection 33(3) of the Acts Interpretation Act 1901 .  This gives APRA the power to revoke or vary the standard.

 

Subclause (2) outlines a list of possible criteria matters to be included in the reporting standards and may include matters may relate to including may relate to   such as the information to be contained in the reporting documents and the form and lodgement period for particular that this information should be provided in .  This subclause provides APRA with the flexibility to keep reporting standards up to date and efficient.   It should be noted that there is no intention to facilitate the collection of personal information in excess of the personal information that APRA is currently empowered to collect.

4.32     Under subclause (3), the se reporting standards may apply to all registered financial sector entities corporations , or a specified class of corporations financial sector entities , or place different requirements to be complied with in different situations for different businesses or activities.

4.33     Subclause (4) notes that the reporting standards can require information from a regulated entity on its consolidated accounts which exclude some entities.  For example, if a bank has 100  per cent % ownership of an insurer, APRA may want to seek consolidated accounts from the bank which reflect the position of the bank and its subsidiaries excluding the insurer.

4.34    

 

S S ubclause ( 5 4 )(a) provides that when APRA prepares reporting standards, it must consult financial sector entities and/or other relevant bodies such that would be affected by the standards set by APRA.  Such relevant bodies would include associations, representative bodies or a class or classes of financial sector entities.

4.35     Subclause ( 5 4 )(b) ensures that APRA must try to minimise the compliance burden on financial sector entities resulting from the requirements of the standards.

4.36     Subclause ( 6 5 ) does not require provides APRA with the power to not to consult as required under subclause (5)(a), if it is satisfied that any delay would result in an unacceptable risk to depositors, policy holders or members of the financial sector entities concerned.  It is intended t T his clause will only be used on prudential safety grounds.

4.37     Subclause (7) states that the validity of a reporting standard is not affected if APRA fails to consult as required under subclause ( 5 4 )(a).

4.38     Subclause (8) provides that I i nstruments issued under paragraph (1)(a) will be disallowable instruments.

4.39     Failure by an entity to provide a reporting document to APRA by the required time is a criminal offence (subclauses (9) - (11)) .

I n order to receive information in a timely manner, subclause (9) makes it an offence if a financial sector entity fails to comply with the requirement under the reporting standard to give a reporting document to APRA by the required time.  The penalty for such an offence is 50 penalty units.

To remove any doubt, subclause (10) inserts a note drawing attention to the effect of section 4K of the Crimes Act 1914 which subclause (9) imposes an obligation under .

Subclause (11) makes an offence for a contravention of subclause (9) a strict liability offence.

Clause 1 3 4 — Principal executive officer of financial sector entity (other than a superannuation entity) to notify the entity’s governing body of a failure to provide reporting documents to APRA

4.40   The application of this clause on superannuation entities, applies the concept of a ‘principal executive officer’ which could potentially be confusing for, and difficult to identify, for superannuation entities.   In some industry funds and large public offer funds, a principal executive officer will be clearly identified.  In other superannuation funds, there can also be a group of trustees or trustee directors making decisions collectively and contracting out other functions to service providers, custodians, fund managers etc.  In this situation, identifying a principal executive officer is difficult and potentially confusing in contrast to an ordinary corporation.  Trustees of superannuation funds will remain solely responsible for lodging annual returns and other documents with APRA. 

4.4 1      This clause attempts to ensure that the governing body of an entity is made aware as soon as possible that documents have not been given to APRA as required.  This is important from a prudential perspective in that it can provide an avenue for early identification by the regulator of potential problems or oversights.

4.4 2      Subclause (1) applies when a financial sector entity (other than a superannuation entity) fails to comply with a requirement to provide APRA with a reporting document as required by, or under, a reporting standard before a particular time or within a particular period.  In the case of superannuation entities, t rustees of superannuation funds will remain solely responsible for lodging annual returns and other documents with APRA.

4.4 3      Sub clause section (2) states that it is the duty of the principal executive officer of the entity to notify the governing body of the entity in writing that the failure has occurred.  This must happen as soon as practicable either after that time or the end of that period.

4.4 4      Sub clause section (3) makes it an offence for the principal executive officer of a financial sector entity to refuse or fail to notify the governing body or entity as required by subclause (2).  The penalty for such an offence is 50 penalty units.

4.4 5      Subclause (4) makes an offence for a contravention of subclause (3) an offence of strict liability.

Clause 14 15  — When reporting standards begin to apply to particular financial sector entities

4.4 6      Reporting standards begin to apply on and after the day declared by APRA.  The standards can apply to a single entity or to the class or kind of financial sector entities on which the entity is included.  Declarations under this clause must be made by APRA in writing and be published in the Gazette .

4.4 7      For example, in the case of a single entity such as an ADI , if it was , is in financial difficulty, APRA will have the power to require more frequent reporting (rather than quarterly) for that particular entity.  APRA will also be able to reissue the Reporting Standard (via, say, a letter direct to the entity with accompanying standard) to the financial sector entity with the variation in requirement.

Clause 1 6 5 — Exemptions

4.4 8      This item clause provides that APRA may exempt, by writing, a registered corporation financial sector entity , or a class or kind of financial sector entities, from the need to comply with a requirement(s) in a reporting standard outlined in clause section 1 3 2 .  The exemption may be subject to conditions.

4. 49      As outlined above in relation to clause 1 3 2 , the reporting standards are disallowable instruments and the Bill provides guidance as to their content .  A further safeguard for corporations entities is the requirement in subclause 1 3 2 ( 5 4 ) that APRA must try to minimise, as far as practicable, the burden on financial sector entities in complying with the standards.  The exemption power in clause 1 6 5 provides an additional means whereby a financial sector entity can raise any particular concerns about compliance with the standards.

4. 50      This clause has also been included as T t he prudential data APRA receives from regulated entities is only relevant if it is accurate and enables identification of weaknesses or potential areas of risk within an entity.  On the other hand, there may be some data collection requirements that are necessary for more sophisticated entities that are and not appropriate for smaller entities.  This power will enable APRA to tailor data collection as necessary in order to fulfil its prudential supervision function adequately.  While entities may not always agree where disadvantageous conditions are attached to an exemption (although, where appropriate APRA can issue an exemption to ease requirements) this is necessary for APRA to adequately fulfil its prudential supervision function.

 

Clause 1 7 6 — APRA may require the variation of a reporting document or the provision of financial information

4.5 1      This clause details options open available to APRA if it thinks considers that the reporting document provided to APRA by a financial sector entity is are either incorrect, incomplete or misleading; or do es not comply with a reporting standard that applies to it; or do es not contain information, or adequate information, about a matter.  This will ensure the integrity of information provided to APRA since accurate prudential information is necessary to enable early identification of potential areas of prudential risk within an entity.

4.5 2      APRA can give the entity written notice requesting it to provide APRA, in writing, an explanation or the provision of information as is specified in the notice.  Time periods and compliance periods are noted in subclause (2).

4.5 3      Subclauses (3) and (4) provide APRA with the power to give written directions for the variation of the document to rectify the matters outstanding and the giving of adequate information.  Time periods and compliance periods for the directions are noted in subclause (5).

4.5 4      F ailure to comply with a direction is a criminal offence (subclauses (8)-(10)).  However, subclauses (6) and (7) enable APRA, of/on its own motion, or at the request of the financial entity to revoke or vary the direction .

Division 3  — Administrative penalties in lieu of prosecution for certain offences

 APRA requires this information to prudentially examine the financial position of an entity.

Subclause (2) states that the notice must specify the time period within which the entity should respond to APRA.  The period should not be less than 14 days beginning on the day on which the notice is given.

2.1                    Subclause s (3) and (4) states that if the notice issued under subclause (1) requested the giving of information and the entity fails to give the explanation or does so but APRA still thinks that the document s is incorrect, incomplete or misleading or does not comply with the reporting standard provide , APRA with the power to may give written directions for the variation of the document to rectify the matters outstanding and the giving of adequate information .     Time periods and compliance periods for the directions are noted in subclause (5).

Subclause (4) is identical to subclause (3) except that in this case, it deal s with the giving of information.  If the entity either fails to give the information, or APRA thinks that the information given is inadequate, APRA can issue a written direction(s) to ensure that the information is provided or is adequate.

Subclause (5) state that written directions under subclauses (3) and (4) must specify the period in which they are to be complied with.  The period is not to be less than 14 days beginning on the day on which the directions are given.

Subclause (6) states that if APRA considers the directions no longer necessary, they must give the entity written notice either revoking or varying the direction. F ailure to comply with a direction is a criminal offence (subclauses (8)-(10)).  However, subclause (6) and (7) enable APRA, of/on its own motion, or at the request of the financial entity to revoke or vary the direction .

Subclause (7) provides for if a financial sector entity applies to APRA to revoke or vary a direction and APRA agrees to, APRA must inform the entity via written notice.

Th e is power to revoke or vary a direction is in relation to prudential information received from regulated entities which may be incorrect, incomplete or misleading and/or non-compliant with a reporting standard.   Failure to comply with a direction is a criminal offence (subclauses (8)-(10)).  However, subclause (6) and (7) enable APRA, of/on its own motion, or at the request of the financial entity to revoke or vary the direction It is not appropriate for an entity to seek merits review on a decision under this subclause since accurate prudential information is necessary for APRA to enable early identification of potential areas of risk within an entity. .

 

Subclause (8) makes it an offence if a financial sector entity fails to comply with a direction given to under subclauses (3) or (4) or with such a direction as varied by subclauses (6) or (7).  The penalty for such an offence is 50 penalty units.

The affect of To remove any doubt, subclause (9) is to make clear that Section 4K of the Crimes Act 1914 applies to an obligation imposed under subclause (8). inserts a note drawing attention to the effect of section 4K of the Crimes Act 1914 which subclause (8) imposes an obligation under .

Subclause (10) makes an offence for a contravention of subclause (8) a strict liability offence.



 

4

 

D ivision 2 3  — Administrative penalties in lieu of prosecution for certain offences .

Clause Clause 1 7 8 — Application of Division

4.5 5      This Division applies to an offence for a contravention of subsection 9(1), (2) or (6), subsection 1 3 2 (9), subsection 1 4(3) 3(4) or subsection 1 7 6 (8).

Clause 1 9 8 — When an infringement notice can be served

4.5 6      This provision sets out when APRA can serve an infringement notice on a n [ entity individual/ person ] where it has reasonable grounds to believe that a financial sector entity has committed an offence(s).

4.5 7      Generally, an infringement notice can only relate to a single offence, unless the offences include refusing or failing to comply with a requirement with a specified time or within a specified period , and one or more daily offences and the offences are one or more daily offences constituted by refusing or failing to comply with the requirement after that time or period.  A further exception will occur where the offences are two or more daily offences constituted by refusing or failing to comply with requirement, by or within , the timeframe specified by the requirement.

4.5 8      This item also inserts a note after subsection 1 9 8 9 ( 2 1 )( b f ) drawing attention to section 4K of the Crimes Act 1914 relating to provisions for daily offences.

4. 59      For an infringement notice served by APRA to have any effect, it must be served within one year after the day on which the offence, or the earlier or earliest of the offences, is alleged to have been committed.

Clause 20 19 — Matters to be included in an infringement notice

4. 60      This clause sets out in a straight forward fashion, outlines matters that APRA must include in an infringement notice, such as details of the alleged offences, penalties in relation to those offences and relevant time periods, amongst other matters.  APRA has the power to extend periods stated in notices in relation to paragraph 1(e) of this clause (see clause 2 4 5 of this Bill).  The maximum amount of the fine or fines that a court could impose for an offence or offences under subclause 13(9) of this Bill is determined, in the case of a body corporate, by reference to subsection 4B(3) of the Crimes Act 1914

Clause 2 1 0 — Withdrawal of infringement notice

4.6 1      This item clause provides flexibility in th e is Bill for when where an infringement notice has been served on a n [individual/ person ] financial sector entity , and then after written representation to APRA, a notice is to have th e is  notice withdrawn upon written representation to APRA .  APRA can withdraw such a notice (whether or not the entity has sought by the entity [individual/ person ] or not to seek the withdrawal ) by serving on the entity , [individual/ person ] a written notice of the withdrawal within the time period within which the penalty specified in the infringement notice is required to be paid.

4.6 2      If the notice is not withdrawn, the company [individual/ person ] can still refuse to pay, at the risk of being prosecuted.  However, if the notice is withdrawn, the company [individual/ person ] may still be prosecuted (see subparagraph 24(b)(ii)) .  So there is no disadvantage or adverse consequences to the entity.  Paragraph 1 of Schedule 1 to the Administrative Decisions (Judicial Review) Act 1977 (ADJR) states that a decision to prosecute is not reviewable under the ADJR Act , and t .  T herefore there is no necessity for merits review.

 

4.6 3      Subclause (3) states the matters APRA may have regard to , but not limited to,   in deciding whether or not to withdraw an infringement notice.  APRA may consider such matters such as whether the entity [individual/ person ] has previously been convicted of an offence for a contravention of this Bill, the circumstances in which the offence(s) specified in the notice are alleged to have been committed, whether the entity [individual/ person ] has been previously been served with an infringement notice in respect of which the entity [individual/ person ] paid the penalty specified in the notice, and any written representations made by the  entity [individual/ person ] .

4.6 4      Subclause (4) specifies that where an infringement notice is withdrawn, APRA must refund to the  entity [individual/ person ] , an amount equal to the amount paid.  For a refund to occur, a n entity [individual/ person ] must have already paid the penalty specified in the infringement notice and the notice is withdrawn after the entity [individual/ person ] pays the penalty.

Clause 2 2 1 — What happens if penalty is paid

4.6 5      When a penalty is paid for offences for contravention of any of the subsections listed in clause 17, it discharges any liability for the entity [individual/ person ] for the offence or offences specified in the notice, and for any other offences or offences constituted by the same omission.  Further proceedings cannot be taken against the entity [individual/ person ] for the offence or offences specified in the notice and proceedings cannot be taken against the entity [individual/ person ] for any other offences or offences constituted by the same omission.  Furthermore, the entity [individual/ person ] is considered as having not been convicted of the offence or offences in the notice.  Subclauses 22(2) and (3) will not prevent the person who pays the penalty specified in an infringement notice from being given another infringement notice in respect of, or from being prosecuted for, any further delay in performing the obligation to which the notice relates which occurs after the period of delay covered by the notice.

4.6 6      This section only applies if the infringement notice served on the entity [individual/ person ] is accurate in that it relates to the act the failure to do which constituted the offence and pays the penalty specified in the notice before the end of the period referred to in 20 19 (1)(e) and the infringement notice is not withdrawn.

Clause 2 3 2 — More than one infringement notice may not be served for the same offence

4.6 7      This clause does not permit APRA serving more tha n t one infringement notice on a financial sector agency [individual/ person ] for the same offence or offences.

Clause 2 4 3 — Infringement notice not required to be served

4.6 8      This clause states that this Division does not require an infringement notice to be served on a financial sector entity [individual/ person ] in relation to an offence, or affect the liability of such a n entity [individual/ person ] to be prosecuted for an offence if: an infringement notice served on the entity [individual/ person ]   in relation to the offence or any other offence constituted by the same omission or whether such an infringement notice has been withdrawn.  Nor does this Division affect the liability of a n entity [individual/ person ] to be prosecuted for an offence if it does not comply with an infringement notice served on it in relation to the offence or any other offence constituted by the same omission.  Finally, this Division does not limit the size of the penalty that may be imposed on a n entity [individual/ person ] convicted of an offence.

Clause 2 5 4 — APRA may extend period for payment of penalty

4. 69      This clause provides APRA with the power to extend the period referred to in subclause 20 19 (1)(e) for a financial sector entity [individual/ person ] to pay a penalty.  APRA must exercise this power in writing.

4. 70      Subclause (2) provides that APRA may exercise this power before or after the end of the period.

4.7 1      If APRA extends a period for the payment of a penalty, a reference to this Division, or in a notice or other instrument under this Division, to the period, is taken , in relation to the  entity [individual/ person ] , to be a reference to the period as so extended.



 

4

 

Part 4  — Miscellaneous

Clause 25 — APRA may publish or provide certain information

This clause makes it explicit that the secrecy provisions applying to this Bill are identical to that which applies under the Australian Prudential Regulation Authority Act 1998 .  The APRA Act protects information and documents given to APRA from being disclosed without authorisation, whilst allowing information exchange between APRA and other regulators such as the RBA, ASIC and international regulators.  Such exchanges are generally covered by bilateral agreements.

Clause 26 — Saving of other laws

4.7 2      Other Australian laws, including any Commonwealth, State and Territory laws will continue in force except to the extent that they are in conflict with this with this Act Bill .

Clause 27 — Entities may be directed to comply with Act

4.7 3      Where a financial sector entity is convicted of an offence against this Act Bill for failing to comply with a provision, the Federal Court may, upon the application by APRA, direct compliance by the financial sector entity within a specified time.

Clause 28 — Validity of acts and transactions of financial sector entities

4.7 4      Failure to meet the provisions of this Act Bill should not affect the validity of a transaction entered into with a registered corporation [ ( check appropriate term ] ) . by the financial sector entity.

Clause 29 — Corporations not to hold out that it is   a registered entity

4.7 5      To preclude a corporation from using words that imply that registration under this legislation confers any special status on it or guarantees its financial soundness or stability, corporations are prohibited in the course of their business from advertising or holding out that they are, “registered under the Financial Sector (Collection of Data) Act 2001 ” or “registered with APRA” or words having similar meaning. 

4.7 6      An offence under this provision carries a maximum penalty of 50 penalty units. 

Clause 30 — Regulations

4.7 7      A standard provision for regulations to be made under this Act Bill is included.

Other - to be inserted when next draft arrives

Power to delegate to the Reserve Bank

The systems for APRA collection of ‘registered entities’ will not be ready on 1 July 2001 but sometime thereafter.  Therefore it will be necessary for the Reserve Bank of Australia to continue to collect this information on behalf of APRA until the APRA systems are set up. 

We therefore need a delegation power from APRA to the RBA (similar to current section 22A of the Financial Corporations Act 1974 ) but only in respect of functions for registered entities ; ie only the functions in Part 2 of the main Bill.  I note the specific information to be lodged is mainly found in the Financial Corporations (Statistics) Regulations.  These regulations will continue to apply to registered entities until the new standards making power is invoked.