Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Josh Frydenberg MP)Chapter 2 - Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
2.1 The Financial Regulator Assessment Authority Bill 2021 and Financial Regulator Assessment Authority (Consequential Amendments and Transitional Provisions) Bill 2021 are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
2.2 The Financial Regulator Assessment Authority Bill 2021 and Financial Regulator Assessment Authority (Consequential Amendments and Transitional Provisions) Bill 2021 give effect to recommendations 6.13 and 6.14 of the Financial Services Royal Commission.
2.3 The Financial Services Royal Commission highlighted that while APRA and ASIC operate within complex accountability frameworks, the regulators' effectiveness in delivering on their mandates is not subject to consistent and independent expert review over time. It recommended establishing a new authority to assess the effectiveness and capability of each of APRA and ASIC.
2.4 In response to this recommendation, the Government agreed to create an independently-chaired body to regularly review and report on the performance of APRA and ASIC.
2.5 There are three key components in the Financial Regulator Assessment Authority Bill 2021.
2.6 First, it establishes the Authority and provides for its functions and powers. APRA and ASIC are required to cooperate with the Authority to enable the Authority to perform its functions and exercise its powers. This cooperation includes providing information and documents requested by the Authority.
2.7 Second, it sets out how members and staff members of the Authority are appointed or made available, and how the Authority makes decisions (including delegations).
2.8 Third, to safeguard information that APRA and ASIC provide to the Authority, it prohibits the unauthorised use or disclosure of protected information provided to the Authority (contravention of the prohibition is a criminal offence).
Human rights implications
Right to freedom of expression
2.9 Part 4 of the Financial Regulator Assessment Authority Bill 2021 engages the right to freedom of expression under Article 19 of the International Covenant on Civil and Political Rights because it includes a secrecy provision that makes it a criminal offence, punishable by up to two years' imprisonment, for unauthorised use or disclosure of protected information by an entrusted person.
2.10 APRA and ASIC are required to provide a wide range of information to the Authority to enable the Authority to perform its functions. This is necessary to enable the Authority to make meaningful assessments of APRA's and ASIC's effectiveness and capability. The unrestricted use or disclosure of some of this information could cause harm, and must therefore be limited to specific circumstances. Accordingly, the Financial Regulator Assessment Authority Bill 2021 classifies some information received from APRA and ASIC as protected information covered by the secrecy provision.
2.11 So as to not unduly limit the right to freedom of expression, the classes of information that are covered as protected information are limited to where harm would result from the unrestricted use or disclosure of the information. For example, where the information is prohibited from being disclosed by another secrecy provision, or would unreasonably disclose personal information, or could reasonably be expected to prejudice enforcement related activities.
2.12 Use or disclosure of protected information is authorised under Subdivision B of Division 2 of Part 4 of the Financial Regulator Assessment Authority Bill 2021, and the secrecy provision also contains defences for disclosures not authorised by that Subdivision.
2.13 An entrusted person is authorised to use or disclose protected information if:
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- the use or disclosure is for the purpose of performing functions or exercising powers under the Financial Regulator Assessment Authority Bill 2021 (for example, this may be done in the course of assessing the effectiveness of the regulators, allowing entrusted persons to share protected information with one another in the course of carrying out the Authority's core functions); or
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- the disclosure is to the Secretary of the Department, to APRA, or to ASIC; or
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- the use or disclosure is reasonably necessary for, or directly relates to, enforcement related activities of an enforcement body; or
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- the Secretary has certified that it is necessary in the public interest to make a particular use or disclosure of protected information, and the entrusted person does so in accordance with that certificate.
2.14 An entrusted person is not prohibited from using or disclosing protected information if:
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- the information is already lawfully available to the public; or
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- the use or disclosure is authorised or required by another Commonwealth law.
2.15 The right to freedom of expression may be subject to permissible limitations, where these limitations are authorised by law, are not arbitrary, and are necessary and proportionate in particular circumstances.
2.16 The secrecy provision provides a significant deterrent to misusing protected information by, for example, disclosing it to the general public or a broad audience. However, the scope of the information regulated by the secrecy provision has been limited to circumstances where harm would result from unrestricted use or disclosure. Sufficiently broad authorisations and defences have been included in the Financial Regulator Assessment Authority Bill 2021 to ensure that the secrecy provision is only contravened where the use or disclosure of information could be harmful.
2.17 For these reasons, to the extent the Financial Regulator Assessment Authority Bill 2021 engages the right to freedom of expression, any limitation resulting from the secrecy provision is proportionate to legitimate ends such as protecting personal information and avoiding prejudice to enforcement-related activities, and is reasonable and necessary in the circumstances. The limitation of this right is therefore consistent with the International Covenant on Civil and Political Rights.
Right to Privacy
2.18 Division 4 of Part 2 of the Financial Regulator Assessment Authority Bill 2021 engages the right to protection from unlawful or arbitrary interference with privacy because the Financial Regulator Assessment Authority Bill 2021 requires APRA and ASIC to give information to the Authority to enable it to perform its functions. Financial Regulator Assessment Authority (Consequential Amendments) Bill 2021 also makes amendments to the APRA Act and the ASIC Act to authorise APRA and ASIC to disclose this information to the Authority.
2.19 Part 4 of the Financial Regulator Assessment Authority Bill 2021 also engages this right, as it allows entrusted persons (defined in clause 5) to disclose protected information, which may include personal information, in specific circumstances.
2.20 The right in Article 14 of the International Covenant on Civil and Political Rights may be subject to permissible limitations, where these limitations are authorised by law and are not arbitrary. In order for an interference with the right to privacy to be permissible, the interference must be authorised by law, be for a reason consistent with the Covenant and be reasonable in the particular circumstances. The United Nations Human Rights Committee has interpreted the requirement of 'reasonableness' to imply that any interference with privacy must be proportional to the end sought and be necessary in the circumstances of any given case.
2.21 Under the new law, APRA and ASIC are required to disclose information to the Authority to enable the Authority to perform its functions. As noted above, the Authority requires a broad range of information from APRA and ASIC to enable the Authority to make meaningful assessments of their effectiveness and capability. Some of this information may be personal information.
2.22 The Financial Regulator Assessment Authority Bill 2021 treats personal information, the broad disclosure of which would be unreasonable, as protected information. Protected information may not be included in a report of the Authority, unless it is already lawfully publicly available.
2.23 An entrusted person is authorised to use or disclose protected information in the circumstances noted in paragraph 2.13. In these circumstances, the Financial Regulator Assessment Authority Bill 2021 authorises the entrusted person, for the purposes of the Privacy Act 1988, to use or disclose the protected information for that purpose.
2.24 These forms of use and disclosure are appropriate as they are for proper legal purposes. They enable the Authority to carry out its functions, and support proper law enforcement activities.
2.25 As noted above, disclosure or use of protected information that is not authorised by one of clauses 42, 43, 44 or 45 of the Financial Regulator Assessment Authority Bill 2021 by an entrusted person is an offence punishable by up to two years' imprisonment, unless such information is already lawfully available to the public, or it is authorised to be disclosed, or required to be disclosed by another Commonwealth law.
2.26 Given the proper legal purposes for which use or disclosure of protected information is permitted, and the strong prohibition against unauthorised use or disclosure of protected information under the Financial Regulator Assessment Authority Bill 2021, the limitation of the right to freedom from interference with privacy is proportionate to the legitimate end sought, and is reasonable and necessary in the circumstances. The limitation of the right is therefore consistent with the International Covenant on Civil and Political Rights.
Right to fair trial
2.27 Part 4 of the Financial Regulator Assessment Authority Bill 2021 engages the right to a fair trial because it imposes an evidential burden on the defendant for two defences to the offence prohibiting the unauthorised use or disclosure of protected information by entrusted persons.
2.28 An entrusted person is authorised to use or disclose protected information in the circumstances noted above (see paragraph 2.13). These will cover the majority of cases in which protected information is lawfully used or disclosed by entrusted persons. In prosecuting an offence for unauthorised use or disclosure, the prosecution will be required to prove that the use or disclosure was not authorised by any of those circumstances.
2.29 Where disclosure is not authorised in one of the circumstances noted in paragraph 2.13, two offence-specific defences exist. Those are where:
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- the information is already lawfully available to the public; or
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- the use or disclosure is authorised or required by another Commonwealth law.
2.30 A defendant bears an evidential burden in relation to these defences. This is appropriate as, in many cases, it will be peculiarly within the knowledge of the defendant how the information may be publicly accessed, or the means by which the conduct was authorised by another law of the Commonwealth. It would be significantly more difficult for the prosecution to disprove these matters than it would be for the defendant to establish these matters. This is due to the wide range of publicly available information and circumstances in which Commonwealth laws authorise or require the disclosure of information.
2.31 The limitation on the right to a fair trial is necessary to achieve the legitimate objective of ensuring information received by the Authority is not used or disclosed in ways that may cause harm. This is because placing an evidential burden on the defendant for these defences is necessary to ensure that the offence is able to be successfully prosecuted, while ensuring that the use or disclosure of protected information is not criminalised in the circumstances covered by those defences.
2.32 The limitation is proportionate and reasonably adapted to that legitimate objective, because the circumstances covered by the defences are not central to the ways in which protected information is to be generally used or disclosed. Generally, the permitted use or disclosure is authorised as noted in paragraph 2.13. In these cases, there is no evidential burden placed on the defendant.
2.33 Accordingly, to the extent that the Financial Regulator Assessment Authority Bill 2021 engages the right to a fair trial in Article 14(2) of the International Covenant on Civil and Political Rights, the limitation of that right is compatible with human rights as it is proportionate to the legitimate end sought, and is reasonable and necessary in the circumstances.
Conclusion
2.34 The Financial Regulator Assessment Authority Bill 2021 and the Financial Regulator Assessment Authority (Consequential Amendments and Transitional Provisions) Bill 2021 are compatible with human rights as any limitations of the right to freedom of expression, the right to freedom from interference with privacy and the right to a fair trial are proportionate, reasonable and necessary, and are therefore consistent with the International Covenant on Civil and Political Rights.