Explanatory Memorandum
(Circulated by authority of the Treasurer, the Honourable Peter Costello MP)19 Schedule 15: Amendment of the Retirement Savings Accounts Act 1997
The purpose of Schedule 15 is to amend the Retirement Savings Accounts Act 1997 (the Act) so as to separate responsibility for the administration of the Act between ASIC and APRA. All of the functions and powers under the Act were formerly performed and exercised by the Insurance and Superannuation Commissioner. Consistent with the amendments of the Superannuation Industry (Supervision) Act 1993 and the Life Insurance Act 1995, ASIC will take on responsibility for market integrity and consumer protection functions under the Act, and APRA will have responsibility for the prudential supervision of retirements savings account providers.
Commencement
19.1 Schedule 15 will commence on the commencement of the proposed Australian Prudential Authority Act 1998.
Division of responsibility
Items 1, 4, 6, 7, 20, 23 and 24
19.2 Item 1 of Schedule 15 allocates functions to ASIC or APRA, or to both ASIC and APRA. It states who has the general administration of the various provisions of the Act. APRA, for example, has Part 3, Approval of RSA Institutions, and section 42, which provides that an RSA provider is not to breach the capital guarantee. These powers relate to the prudential supervision of RSA providers, and endow APRA with functions and powers to enable it to supervise the financial security of these providers.
19.3 Proposed paragraphs 3(1)(a) and (b) confer functions and powers on APRA.
19.4 Proposed paragraphs 3(1)(c) and (d) confer functions and powers on ASIC. For example, subparagraph (c)(i) states that ASIC has the general administration of Part 5 of the Act (other than section 49), dealing with the duties of RSA providers and employers. The duty of an RSA provider to keep minutes and records (section 48 of the Act) and to ensure that employers who apply for RSAs on behalf of employees are properly informed about the RSA (section 54 of the Act) are matters relating to market integrity and consumer protection in the RSA market, and are therefore matters within the responsibility of ASIC.
19.5 Proposed subsection 3(2) confers powers and duties which will be shared by ASIC and APRA. These are functions and powers which can equally be used as a tool of market integrity/consumer protection or prudential regulation. ASIC and APRA will both have an interest, for example, in supervising compliance with section 38 of the Act, which sets out the operating standards with which RSA providers must comply. Part 10 of the Act, which deals with investigatory powers, confers powers and duties on both regulators. This is because ASIC and APRA will both need to have access to a full range of powers in order to conduct their supervisory functions under the Act.
19.6 Close liaison between ASIC and APRA will ensure that the regulators adopt a co-ordinated approach to their dealings with entities in which they both have an interest. The Minister will have the power to give ASIC or APRA directions about the performance or exercise of their functions or powers under the Act (proposed subsection 3(3)). This power is transferred from subsection 3(2) of the Act, and extended to the actions of ASIC in order to preserve the Minister's discretion over the regulators' conduct under the Act.
19.7 In addition, subsection 114(3) is amended by item 23 to provide that ASIC and APRA must give to each other copies of reports of any investigation carried out under the Act.
19.8 To assist ASIC and APRA to co-operate, new section 129A (item 24) enables either regulator to appoint a member of staff of the other regulator to carry out the functions of an 'authorised person' (defined in item 4) under the Act. Items 6 and 7 therefore insert definitions of the expressions 'member of the staff of APRA' and 'member of the staff of ASIC' into section 16. Item 20 makes a similar amendment specifically in relation to the appointment of inspectors under Division 3 of Part 10.
19.9 It is expected that ASIC and APRA will enter a memorandum of understanding which will refer to such provisions and other matters.
Change of regulator and regulator's name
Items 2, 3, 5, 10, 12 22, 25, 26, 30, 31, 34 115
19.10 Until the commencement of the proposed Financial Sector Reform (Amendments and Transitional Provisions) Act (the FSR Act), the Insurance and Superannuation Commissioner is responsible for supervising all aspects of compliance with the Act, and conducts both market integrity/consumer protection and prudential regulation. On commencement of the proposed FSR Act, the Insurance and Superannuation Commissioner Act 1987 will be repealed and the office of Insurance and Superannuation Commissioner will no longer exist. Item 5 therefore amends section 16 by repealing the definition of 'Commissioner'.
19.11 Schedule 15 also repeals other references in the Act to the 'Insurance and Superannuation Commissioner' or the 'Commissioner' and replaces them with references to ASIC or APRA where appropriate. In the case of provisions which are referable to both ASIC and APRA, the expression 'the Regulator' replaces references to the 'Insurance and Superannuation Commissioner' or the 'Commissioner'. Item 10 inserts a definition of 'Regulator' into section 16 of the Act. The provisions which insert references to the Regulator in place of references to the 'Insurance and Superannuation Commissioner' or the 'Commissioner' are: 15 ;17; 18; 20; 70 115.
19.12 Items 2 and 3 insert definitions of 'APRA' and 'ASIC' into the Act. The items which insert references to APRA in place of references to the 'Insurance and Superannuation Commissioner', the 'ISC' or the 'Commissioner' are: 16; 30; 31; 34 63.
19.13 The items which insert references to ASIC in place of references to the 'Insurance and Superannuation Commissioner' or the 'Commissioner' are: 17; 18; 64 69.
19.14 Because the Act no longer refers to regulation conducted by a natural person (the Insurance and Superannuation Commissioner), but rather to the acts of an agency (ASIC or APRA), the Act no longer uses the expressions 'he or she' or 'his or her' when referring to the Commissioner. Amendments of the Act to refer to 'it', 'its' or 'the Regulator' are in items 12; 13; 14; 22; 25 and 26.
19.15 Similarly, because ASIC and APRA are not natural persons, references to documents in writing signed by the 'Insurance and Superannuation Commissioner' or the 'Commissioner' are amended to refer to documents prepared 'in writing'. Subsection 96(1) is amended to clarify that APRA may appoint an inspector under that provision in this way (item 19). Item 21 makes an equivalent change for delegations made under subsection 97(1).
Repeal of provisions
Items 8, 9, 11, 27 - 29, 32 and 33
19.16 Some of the provisions in the Act deal with general administrative matters which are more appropriately dealt with in the Australian Securities and Investments Commission Act 1989 and the proposed Australian Prudential Regulation Authority Act. For example, both the Australian Securities and Investments Commission Act and the proposed Australian Prudential Regulation Authority Act include comprehensive provisions dealing with the delegation of powers by the regulators. For this reason, it is no longer necessary to include in the Act a separate power to delegate functions under the Act. Therefore, the delegation power in section 198 of the Act is repealed.
19.17 Similarly, the annual reporting responsibilities of ASIC and APRA under the Commonwealth Authorities and Companies Act 1997 are dealt with in the Australian Securities and Investments Commission Act and the proposed Australian Prudential Regulation Authority Act. It is therefore no longer necessary to retain section 199 of the Act.
19.18 The secrecy provision in the Act (section 191) deals with the manner in which the ISC was required to treat information gathered by it about RSA providers 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 Life Insurance Act 1995. However, it is different from the secrecy regime under which the ASC operated in relation to its corporate law functions.
19.19 The proposed Australian Prudential Regulation Authority Act contains a secrecy provision governing all of APRA's activities. Section 127 of the Australian Securities and Investments Commission Act 1989, which previously related only to corporate regulatory functions, will be extended to cover ASIC's new functions in insurance and superannuation regulation, so that ASIC will be able to perform all of its functions under the same secrecy regime. Therefore section 191 is also repealed.
19.20 The items which repeal superfluous powers, functions and definitions in the Act are: 8; 9; 11; 27 - 29; 32 and 33.