Financial System Legislation Amendment (Financial Claims Scheme and Other Measures) Act 2008 (105 of 2008)

Schedule 1   Financial Claims Scheme

Part 3   Amendment of the Australian Prudential Regulation Authority Act 1998

49   After section 54

Insert:

Division 2 - Financial Claims Scheme Special Account and related borrowing

Subdivision A - Financial Claims Scheme Special Account

54A Financial Claims Scheme Special Account

(1) The Financial Claims Scheme Special Account is established by this section.

(2) The Account is a Special Account for the purposes of the Financial Management and Accountability Act 1997.

54B Credits to the Financial Claims Scheme Special Account

(1) There must be credited to the Account amounts equal to the following:

(a) an amount specified in a declaration under section 16AD of the Banking Act 1959 or section 62ZZC of the Insurance Act 1973 as an amount to be credited to the Financial Claims Scheme Special Account;

(b) an amount borrowed under this Division.

(2) To avoid doubt, if:

(a) the amount specified in a declaration described in paragraph (1)(a) is credited to the Financial Claims Scheme Special Account; and

(b) the declaration is later amended so as to increase the amount;

only the increase, and not the whole of the increased amount, is to be credited to the Account as a result of the amendment.

Note: Crediting the whole of the increased amount to the Account would lead to double-counting of the amount specified in the declaration before the amendment.

54C Purposes of the Financial Claims Scheme Special Account

The purposes of the Financial Claims Scheme Special Account are as follows:

(a) APRA:

(i) meeting account-holders’ entitlements under Subdivision C (Payment of account-holders with declared ADI) of Division 2AA of Part II of the Banking Act 1959; or

(ii) paying APRA’s agents or delegates amounts equal to the entitlements the agents or delegates meet on APRA’s behalf or in the performance of APRA’s delegated functions;

(b) APRA:

(i) meeting persons’ entitlements under Division 3 (Early payment of claims) of Part VC of the Insurance Act 1973; or

(ii) paying APRA’s agents or delegates amounts equal to the entitlements the agents or delegates meet on APRA’s behalf or in the performance of APRA’s delegated functions;

(c) repayment of principal under a borrowing under this Division;

(d) payment of interest and other costs connected with a borrowing under this Division.

Note: See section 21 of the Financial Management and Accountability Act 1997 (debits from Special Accounts).

54D Debits to reflect reduced amounts specified in declarations

If a declaration under section 16AD of the Banking Act 1959 or section 62ZZC of the Insurance Act 1973 specifying an amount to be credited to the Financial Claims Scheme Special Account is amended so as to reduce the amount, an amount equal to the reduction must be debited from the Account.

Subdivision B - Borrowing for payments from the Financial Claims Scheme Special Account

54E Borrowing

(1) With the Finance Minister’s written approval, APRA may, on behalf of the Commonwealth, borrow money on terms and conditions specified in, or consistent with, the approval.

(2) However, the borrowing must not:

(a) be of an amount greater than the sum of the amounts specified in declarations under either section 16AD of the Banking Act 1959 or section 62ZZC of the Insurance Act 1973 as amounts that are to be credited to the Financial Claims Scheme Special Account; or

(b) be for a period longer than 12 months.

(3) If an amount is borrowed under this section in connection with a declaration described in paragraph (2)(a), the declaration has effect for future applications of this section as if the amount specified in the declaration were reduced by the amount previously borrowed in connection with the declaration.

(4) APRA must not borrow money except under this section.

(5) The Finance Minister may delegate, in writing, to an SES employee or acting SES employee in the Department that is administered by the Finance Minister, the Finance Minister’s power of approval for the purposes of subsection (1).

(6) In this section:

borrow includes raise money or obtain credit, whether by dealing in securities or otherwise, but does not include obtain credit in a transaction forming part of the day-to-day operations of APRA.

Finance Minister means the Minister who administers the Financial Management and Accountability Act 1997.

Division 3 - Taxation of APRA