Senate

Explanatory Memorandum

(Circulated by authority of the Minister for Financial Services and Regulation, the Honourable Joe Hockey, MP)

Outline and financial impact

Outline

1.1 This Bill transfers the administration of the Financial Corporations Act 1974 from the Reserve Bank of Australia (RBA) to the Australian Prudential Regulation Authority (APRA).

1.2 When APRA was established on 1 July 1998, it inherited a variety of data collection tools and analysis systems. These tools and systems were tailored to meet the data needs of APRAs predecessor organisations (Insurance and Superannuation Commission, RBA, State Supervisory systems and Australian Financial Institution Commission).

1.3 This Bill aims to modernise and increase the relevance of data collections, thereby ensuring that APRA collects the data it requires for the purposes of its prudential functions. The data APRA collects will also continue to facilitate the formulation of monetary policy by the RBA. Secondly, it aims to harmonise and increase the flexibility of the data collections and publishing regimes, and finally, to have a central repository for the collection of financial data. Overall, the proposed regulatory measures are designed to streamline and simplify the current data collection methods and systems.

1.4 The Bill covers the following broad areas:

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entities covered by the Bill;

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the registration of corporations and the obligations on those corporations;

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the power for APRA to determine reporting standards that will require compliance with the standards through the provision of reporting documents by financial sector entities; and

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the application of the Commonwealths criminal code to certain offences in this Bill.

Financial impact statement

1.5 It is not envisaged that the Bill will have a financial impact on the operations of government. The Australian Prudential Regulation Authority is self-funded through financial sector levies.