Explanatory Memorandum
(Circulated by authority of the Treasurer,the Hon Peter Costello, MP)9 - Schedule 6 amendment of the life insurance Act 1995
Item 1
9.1 This item removes the existing sunset clause, permanently removing the right to appeal against the specified prudential decisions to the Administrative Appeals Tribunal (AAT).
9.2 The Life Insurance Act 1995 was originally amended by the Financial Laws Amendment Act 1997 to remove the right to appeal to the AAT on some prudential decisions made under the Life Insurance Act. This right to appeal was removed to allow APRA to act quickly in the event of a financial crisis to prevent contagion across the financial system. It was felt that the ability of a life insurance company to obtain a stay of a decision by seeking administrative review could have curtailed rapid action by APRA to resolve the financial crisis and could jeopardise policyholder interests.
9.3 Instead, these decisions were to be made with Ministerial consent and subject to a five year sunset clause, pending an examination of the operation of the non-reviewable decisions. The five year sunset clauses are due to expire in July 2002, and a review which included industry consultation found that there were no objections to the removal of the sunset clauses and the maintenance of the non-reviewability of decisions.
Item 2
9.4 This item repeals this subsection. Currently, the subsection refers to the need to get the Treasurers agreement to the specific prudential decisions referred to in the Life Insurance Act, which have had their right of appeal to the AAT removed. This duplicates requirements that are already contained in the various subsections to which the specific decisions refer, therefore the need for the separate stand alone requirement should be removed.
Commencement
9.5 These amendments will commence the day after the day on which this Act receives the Royal Assent.