Explanatory Memorandum
(Circulated by authority of the Minister for Financial Services and Regulation, the Honourable J.B. Hockey, MP)6 - Schedule 3 - Amendment of the Financial Corporations Act 1974
| Schedule 3 amends the Financial Corporations Act 1974 (FCA) to reduce compliance costs on business, to make the information collection provisions more flexible and remove unused provisions, including with respect to the regulation of registered financial corporations. In addition, the proposed amendments will enable the Reserve Bank of Australia (RBA) to delegate the majority of its functions under the FCA to APRA, the Australian Statistician or a staff member of APRA or the Australian Bureau of Statistics (ABS). |
6.1 The amendments to the FCA will commence on the day on which this Bill receives Royal Assent.
6.2 This item repeals the existing object and inserts a new object consistent with the amendments made by this Schedule. The revised object of the FCA is to enable information to be collected from registered financial corporations to assist the RBA in its formulation of monetary policy.
References to the Statistician
6.3 As the role for the Statistician will be limited to accepting delegated functions, the existing definition of the Statistician is no longer necessary and hence this item proposes to remove it.
Threshold for Corporations to which FCA applies
6.4 This item lifts the legislative threshold for corporations, to which the FCA applies, to cases where the value of assets of the corporation engaged in the provision of finance, in the course of carrying on retail business of selling goods, exceeds $25 million.
6.5 This item makes a technical amendment to the title of the National Health Act.
Corporations to which FCA does not apply
6.6 As a result of this item, the FCA will not applying to a corporation and every related corporation with assets of less than $5 million unless a lesser amount is prescribed by the regulations.
6.7 These items propose to remove the distinction of powers between the Governor of the RBA and RBA by vesting all powers in the RBA.
6.8 This item will enable the RBA to specify, in writing, standards on the information to be provided by corporations registered under the FCA and the form that this information should be provided in. These standards may apply to all registered corporations or a specified class of corporations or place different requirements to be complied with for different activities or situations.
6.9 Standards issued under the proposed section 11 will be disallowable instruments.
6.10 A registered corporation may be exempted by the RBA under the proposed section 12 from the need to comply with a requirement in a standard. The exemption may be subject to conditions. The RBA must ensure that up to date copies of the text of exemptions are accessible.
6.11 The RBA may vary or revoke a standard or exemption at any time. However, the RBA must ensure that registered corporations and other persons can access the current standards and exemptions.
6.12 A registered corporation, without an exemption, found guilty of the offence of failing to provide the information required by a standard, under the proposed subsection 11(2), may be subject to a maximum penalty of 200 penalty units.
6.13 A registered corporation found guilty of an offence for failing to provide information in the form required by the standards, under the proposed subsection 11(2), may be subject to a maximum penalty of 50 penalty units.
6.14 This item repeals the unproclaimed Part IV of the FCA. Part IV of the FCA encompasses the provisions relating to the regulation and control of the business of financial corporations (including on asset ratios, interest rates, lending policies, determinations and directions, and exemptions).
Manner of Furnishing Documents
6.15 This item updates section 21 of the FCA to remove the reference to the Australian Statistician. Therefore, documents are only required to be delivered to the Head Office of the Reserve Bank.
Delegation of Functions under the FCA
6.16 This item repeals the existing delegation provisions and inserts a new provision that will enable the Governor of the RBA, in writing, to delegate any of the RBAs functions or powers under the FCA, except the proposed section 11, to a member of the Reserve Bank Board, member of the RBA service or in certain circumstances the Chief Executive Officer of APRA, the Australian Statistician, an APRA staff member or ABS staff member. The proposed section 11 deals with determining, varying or revoking information standards.
6.17 The Governor, in delegating functions, may vary or revoke a delegation and impose conditions on the delegates exercise or performance of functions or powers under a delegation.
6.18 The Governor may direct that references to the RBA in a provision should be modified to reflect the person to whom the delegation is made.
6.19 This item updates a legislative reference with respect to the policy of the RBA.
6.20 This item proposes to increase the maximum penalty level under section 26 for a corporation holding itself out, in the course of its business, as being registered under the FCA to 50 penalty units.
6.21 This item repeals section 30 of the FCA that allows the Treasurer to appoint advisory committees. These committees are unnecessary since the established of the Financial Sector Advisory Council.