Explanatory Memorandum
(Circulated by authority of the Treasurer, the Honourable Peter Costello MP)16 Schedule 12: Amendment of the Insurance Contracts Act 1984
The purpose of Schedule 12 is to transfer regulatory responsibility for the Insurance Contracts Act 1984 (the Act) to ASIC. The Act regulates such aspects of insurance contracts as the duty of good faith, insurable interests, expiration and subrogation. All of the functions and powers under the Act have been performed and exercised by the ISC.
Commencement
16.1 Schedule 12 will commence on the commencement of the proposed Australian Prudential Regulation Authority Act 1998.
Change of name of regulator
16.2 Prior to the commencement of the proposed Financial Sector Reform (Amendments and Transitional Provisions) Act 1998, the Insurance and Superannuation Commissioner has been responsible for supervising all aspects of compliance with the Act. On commencement of Schedule 11, the Insurance and Superannuation Commissioner Act 1987 will be repealed and the office of Insurance and Superannuation Commissioner will no longer exist.
16.3 Schedule 12 therefore amends references in the Act to the 'Insurance and Superannuation Commissioner' by replacing them with references to ASIC.
16.4 The items which insert references to ASIC in place of references to the Insurance and Superannuation Commissioner are: 1; 3; 8 -13.
16.5 The definition of Commissioner is repealed (Item 2).
Repeal or winding back of provisions
16.6 Some of the provisions in the Act deal with general administrative matters which are more appropriately dealt with in the specific ASIC Act. For example:
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- the ASIC Act includes comprehensive provisions dealing with the delegation of powers by ASIC. For this reason, it is no longer necessary to include in the Act a separate power to delegate functions. Therefore, the delegation power in section 11G of the Act is repealed (Item 5).
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- ASIC is already required to produce an annual report by the Commonwealth Authorities and Companies Act 1997. For this reason, it is no longer necessary to include in the Act a separate requirement to give the Treasurer a written report on the operation of this Act during each financial year. Therefore, section 11H which includes this requirement is repealed (Item 6).
16.7 The secrecy provision in the Act (section 11F) deals with the manner in which the ISC was required to treat information gathered by it under the Act in the course of conducting its functions. This provision is broadly consistent with the secrecy provisions administered by the ISC under other legislation for which it had responsibility, eg the Superannuation Industry (Supervision) Act 1993 and the Life Insurance Act 1995. However, it is different from the secrecy regime under which the ASC operated in relation to its corporate law functions.
16.8 Section 127 of the ASIC Act, which previously related only to corporate regulatory functions, will be extended to cover ASIC's new functions under the Act, so that ASIC will be able to perform all of its functions under the same secrecy regime (see Schedule 1). Therefore, section 11F is repealed (Item 4).
16.9 A minor technical amendment is made to paragraph 66(a) (Item 7), to substitute "insured's" in the place of "insurer's". The incorrect word was inserted by the Financial Laws Amendment Act 1997.