Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2004-2005-2006-2007
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
FINANCIAL SECTOR LEGISLATION AMENDMENT (SIMPLIFYING
REGULATION AND REVIEW) BILL 2007
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments Moved on Behalf of the Government
(Circulated by authority of the
Minister for Revenue and Assistant Treasurer, the Hon Peter Dutton MP)
Table of contents
General outline and financial impact ....................................................... 1
Chapter 1 Amendments 1 to 14 to Schedule 1............................... 3
iii
General outline and financial impact
Amendments 1 to 14 to Schedule 1 -- Streamlining Prudential
Regulation
Amendments 1 to 14 correct drafting errors to ensure that the reforms
being introduced by the Bill operate as intended.
Date of effect: Amendments 1 to 9 apply from the date of Royal Assent;
amendments 10 to 13 apply from 1 January 2008; and amendment 14
applies from 1 July 2011.
Proposals announced: These amendments give effect to proposals
announced in the paper Streamlining prudential regulation: response to
`Rethinking Regulation', released on 4 December 2006 by the Minister for
Revenue and Assistant Treasurer.
Financial impact: Nil
Compliance cost impact: Nil
1
Chapter 1
Amendments 1 to 14 to Schedule 1 --
Streamlining Prudential Regulation
Outline of chapter
1.1 Schedule 1 to this Bill amends the Banking Act 1959, Insurance
Act 1973 (Insurance Act), Life Insurance Act 1995 (Life Act) ,
Superannuation Industry (Supervision) Act 1993 (SIS Act) (collectively,
the prudential Acts) and other related legislation, to implement
Government commitments relating to prudential regulation in response to
Rethinking Regulation: The Report of the Taskforce on Reducing
Regulatory Burdens on Business (Regulation Taskforce).
1.2 It also includes additional measures to streamline and simplify
the prudential Acts in a manner that is consistent with the Regulation
Taskforce's findings.
1.3 The following amendments make changes to Schedule 1 of the
Bill to correct drafting errors.
Explanation of amendments
Amendment 1
1.4 Amendment 1 amends item 53 of Schedule 1 so that
paragraph 7(1)(a) of the Insurance Act excludes Division 3A of Part III of
the Insurance Act.
1.5 Item 53 of Schedule 1 inserts a new paragraph 7(1)(a) of
Insurance Act, which gives APRA the power to make determinations
exempting a person or a class of persons from the provisions of Part III of
the Insurance Act. Consistent with the proposals announced in
Streamlining Prudential Regulation, this reference should not include
Division 3A of Part III.
Amendment 2
1.6 Amendment 2 inserts item 65A into Schedule 1. Item 65A
repeals section 49D of Insurance Act dealing with self-incrimination.
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Financial Sector Legislation Amendment (Simplifying Regulation and Review) Bill 2007
1.7 The general self-incrimination provisions, contained in new
section 38F of Insurance Act, inserted by item 62 already provide
protection from self-incrimination. Therefore, section 49D is repealed to
ensure that the protection from self-incrimination is not duplicated.
Amendments 3 and 14
1.8 Amendment 3 inserts new item 71A into Schedule 1 so that
subsection 16C(4) of the Life Act includes a reference to prudential
standards, commencing on date of Royal Assent.
1.9 Item 260 of the Bill incorrectly repeals subsection 16C(4) of the
Life Act on 1 July 2011. Amendment 14 amends item 260 so that
subsection 16C(4) of the Life Act is not repealed on 1 July 2011 and
amends subsection 16C(4) to remove the reference to prudential rules
commencing on 1 July 2011.
1.10 Collectively, Amendment 3 and amendment 14 give effect to
the phasing out of prudential rules by 30 June 2011.
Amendments 4, 7, 8 and 9
1.11 Amendment 4 omits item 149 which repeals section 130B of
the SIS Act. Section 130B provides that individuals giving information to
the Regulator under sections 129 and 130 of SIS Act enjoys use immunity
in relation to the information. Use immunity provided under section 130B
should be retained.
1.12 Amendment 7 amends item 154 of Schedule 1 so that section
336F dealing with self-incrimination does not apply to sections 129 or 130
under the SIS Act. This is because self-incrimination in respect of
sections 129 and 130 is dealt with by section 130B.
1.13 Amendment 8 inserts a note into item 154 of Schedule 1 to
clarify that section 130B dealing with self-incrimination applies to
sections 129 and 130. Amendment 9 renumbers the note that already
exists in item 154 as a result of amendment 8.
Amendments 5 and 6
1.14 Item 150 of the Bill includes as a modifiable provision section
113 of SIS Act. However section 113 is repealed by Item 9 of Schedule 3
and replaced by new section 35C in Item 8 of Schedule 3 as a result of the
Government's reforms to consolidate and rationalise the prudential
reporting requirements in the SIS Act. New section 35C is a modifiable
provision.
4
Chapter 1: Amendments 1 to 14 to Schedule 1 -- Streamlining Prudential Regulation
1.15 Amendment 5 amends item 150 by inserting new
paragraph 327(aa) into section 327 of SIS Act referring to new
section 35C of SIS Act. Amendment 6 amends item 150 by omitting
paragraph 327(f) of the SIS Act referring to section 113 of the SIS Act.
Amendment 10
1.16 Amendment 10 amends paragraph 121AO(2)(a) of the
Income Tax Assessment Act 1936 (ITAA 1936) to omit references to the
Life Insurance Actuarial Standards Board (LIASB) and a capital adequacy
standard applicable to the company and replaces them with a reference to
a prudential standard in relation to a capital adequacy standard applied to
the company.
1.17 At the time the LIASB was created, it was considered that the
Australian Prudential Regulation Authority (APRA) did not have adequate
actuarial capacity to develop actuarial standards for life companies. Since
that time, APRA has provided full secretariat support to the LIASB and
has developed its own capacity to determine standards dealing with
actuarial matters. Therefore, Schedule 1 of the Bill abolishes the LIASB
and removes the concept of actuarial standards from the Life Act from
1 January 2008. A consequential amendment to ITAA 1936 is required a
result of these changes.
Amendments 11 and 12
1.18 Amendments 11 and 12 insert new items 207A and 212A into
Schedule 1 to omit from paragraphs 87(1)(c) and 95(1)(d) of the Life Act
references to regulations and to insert in their place references to
prudential standards.
1.19 Sections 87 and 95 of the Life Act respectively require a life
company to notify APRA when it appoints an auditor and actuary for the
company. Currently, additional matters to be included in the notice may
be prescribed under the Life Regulations 1995. The amendments ensure
that these matters can be dealt with in prudential standards. This approach
is consistent with the principles based approach adopted in the Bill which
provides that specific requirements relating to auditors and actuaries be set
out in prudential standards.
Amendment 13
1.20 Amendment 13 omits item 238 of Schedule 1 of the Bill.
Item 238 amends the definition of `the Act' for the purposes of the Life
Act to replace a reference to `the instruments made under that Act referred
to in paragraph (a)' with a reference to `prudential standards made under
that Act'. This has the effect of excluding regulations and prudential rules
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Financial Sector Legislation Amendment (Simplifying Regulation and Review) Bill 2007
made under the Life Act from being considered part of the Act. Omitting
item 238 from the Bill corrects this situation.
1.21 Prudential rules are being phased out by 1 July 2011 as a result
of other amendments introduced by the Bill. Consequently, from that
date, prudential rules will not be considered instruments under the
Life Act.
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