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2008
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
FINANCIAL SECTOR LEGISLATION AMENDMENT (REVIEW OF
PRUDENTIAL DECISIONS) BILL 2008
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Superannuation and Corporate Law, Senator the Hon Nick Sherry)
Table of contents
Glossary ...................................................................................... 1
General outline and financial impact....................................................... 3
Chapter 1 Court power of disqualification ..................................... 5
Chapter 2 Direction powers .........................................................19
Chapter 3 Removal of ministerial consent ...................................29
Chapter 4 Review of decisions ....................................................39
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
Abbreviation Definition
ADI authorised deposit-taking institution
APRA Australian Prudential Regulation Authority
ASIC Australian Securities and Investments
Commission
ATO Australian Taxation Office
Banking Act Banking Act 1959
Corporations Act Corporations Act 2001
DMF and DOFI Act Financial Sector Legislation Amendment
(Discretionary Mutual Funds and Direct
Offshore Foreign Insurers) Act 2007
FSCODA Financial Sector (Collection of Data) Act
2001
Insurance Act Insurance Act 1973
Life Act Life Insurance Act 1995
NOHC Non-Operating Holding Company
Prudential Acts Banking Act 1959, Insurance Act 1973, Life
Insurance Act 1995, Superannuation
Industry (Supervision) Act 1993
Rethinking Regulation: Report Rethinking Regulation
of the Taskforce on Reducing
Regulatory Burdens on Business
RPD Bill Financial Sector Legislation Amendment
(Review of Prudential Decisions) Bill 2008
RSA Act Retirement Savings Accounts Act 1997
SIS Act Superannuation Industry (Supervision) Act
1993
SMSF self managed superannuation fund
SPR Act Financial Sector Legislation Amendment
(Simplifying Regulation and Review) Act
2007
1
General outline and financial impact
Overview
The Financial Sector Legislation Amendment (Review of Prudential
Decisions) Bill 2008 (the Bill) amends the Banking Act 1959 (Banking
Act), Insurance Act 1973 (Insurance Act), Life Insurance Act 1995 (Life
Act) and Superannuation Industry (Supervision) Act 1993 (SIS Act)
(collectively, the Prudential Acts), the Retirement Savings Accounts Act
1997 (RSA Act) and the Financial Sector Collection of Data Act 2001
(FSCODA), to improve the efficiency, transparency and consistency of
the process for disqualifying individuals from operating financial sector
entities and enhance the accountability of the regulator for administrative
decision-making under the Prudential Acts, RSA Act and FSCODA.
The amendments introduce a court-based process for disqualifying an
individual from operating an entity regulated by the Australian Prudential
Regulation Authority (APRA), streamline APRA's directions powers
where appropriate, and remove ministerial consent from, and expand the
availability of merits review for appropriate administrative decisions made
by the regulator under the Prudential Acts and FSCODA.
Court power of disqualification
Schedule 1 of the Bill amends each of the Prudential Acts to introduce a
court-based process for disqualifying an individual from operating an
APRA-regulated entity. The new regime is broadly consistent with the
Court disqualification regime under the Corporations Act 2001
(Corporations Act).
Date of effect: These amendments apply from the date of Royal Assent
unless specified otherwise.
Proposals announced: Detailed proposals were released for public
comment on 31 May 2007 in a paper entitled Review of Prudential
Decisions.
Financial impact: The measures have no significant financial impact.
Compliance cost impact: Low. The measures simplify existing processes
and affect a very small proportion of the financial community.
3
Directions powers, removal of ministerial consent and review
of decisions
Schedule 2 of the Bill streamlines APRA's direction powers, currently
scattered throughout the Banking Act, Insurance Act and Life Act, into a
general directions provision under each of these Acts. Such directions, if
triggered by certain conditions specified under the general directions
provisions, are subject to merits review by the Administrative Appeal
Tribunal (the AAT).
Schedule 3 of the Bill amends each of the Prudential Acts to remove
ministerial consent from certain administrative decisions made by APRA
or the Australian Taxation Office (the ATO) (in the case of self managed
superannuation funds (SMSFs)) where wider policy interests are not
involved.
Schedule 4 of the Bill amends each of the Prudential Acts to expand the
availability of merits review for appropriate administrative decisions made
by APRA or the ATO (in the case of SMSFs) consistent with the
guidelines developed by the Administrative Review Council. Under the
amendments, merits review will be available for licensing and
authorisation-related decisions, decisions to ensure compliance with
minimum prudential standards and certain directions decisions.
Date of effect: These amendments apply from the date of Royal Assent
unless specified otherwise.
Proposals announced: The proposals were released for further public
comment on 31 May 2007 in a paper entitled Review of Prudential
Decisions.
Financial impact: The measures have no significant financial impact.
Compliance cost impact: Low. The measures will simplify existing
regulatory powers and processes, and broaden access to the review of
decisions. The measures will affect a small proportion of the financial
community in practice.
1 Chapter 1
Court power of disqualification
Outline of chapter
.1 Schedule 1 of the Bill amends the Banking Act 1959 (Banking Act),
Insurance Act 1973 (Insurance Act), Life Insurance Act 1995 (Life Act),
Superannuation Industry (Supervision) Act 1993 (SIS Act) (collectively,
the Prudential Acts) and the Retirement Savings Accounts Act 1997 (RSA
Act). The amendments replace the existing APRA-determined
disqualification regime under each of the Prudential Acts and the RSA
Act with a court-based disqualification regime, similar to the
disqualification regime available to the Australian Securities and
Investments Commission (ASIC) under the Corporations Act 2001
(Corporations Act).
.2 The new disqualification regime will apply to responsible persons of
APRA-regulated entities, including directors, senior managers, principle
executive officers, auditors, actuaries, individual trustees where relevant
to a Prudential Act, directors, secretaries and executive officers of a body
corporate that is a trustee, investment manager or custodian of a regulated
superannuation entity under the SIS Act, senior managers or agents in
Australia for a foreign general insurer under the Insurance Act and
approved auditors under the RSA Act.
.3 The new disqualification regime will not apply to responsible persons
relating to self managed superannuation funds (SMSFs), regulated by the
Australian Taxation Office (ATO).
Context of amendments
.4 Consistent with recommendation 5.4 of Rethinking Regulation:
Report of the Taskforce on Reducing Regulatory Burdens on Business
(Rethinking Regulation), public comment was sought on the proposal to
enhance the consistency and flexibility in the disqualification regime
applying to individuals under the Prudential Acts, in a consultation paper
Streamlining Prudential Regulation: `Response to Rethinking Regulation'
released on 4 December 2006.
5
.5 While industry submissions were generally supportive of enhancing
the robustness and flexibility of the disqualification regime, concerns were
also raised about inconsistencies between the APRA-determined
disqualification regime under the Prudential Acts and the court-based
disqualification regime under the Corporations Act.
.6 In light of industry comments, a court-based process for disqualifying
individuals under APRA-administered legislation will be introduced,
similar to the disqualification framework used by ASIC. Detailed
proposals were canvassed in a paper Review of Prudential Decisions,
which was released for public comment on 31 May 2007. Schedule 1 of
the Bill gives effect to these proposals.
Summary of new law
.7 Schedule 1 of the Bill amends each of the Prudential Acts and the
RSA Act to introduce a court-based disqualification regime that is similar
to the regime available to ASIC under the Corporations Act.
.8 There are also miscellaneous amendments to the Prudential Acts to
ensure APRA's powers to remove a responsible person on `fit and proper'
grounds are consistent with the new disqualification regime.
Comparison of key features of new law and current law
New law Current law
Under the Prudential Acts, the Under the Prudential Acts, the power
Federal Court may disqualify an to disqualify an individual from being
individual from being or acting as a or acting as a responsible person for
responsible person for an APRA- an APRA-regulated entity on `fit and
regulated entity on `fit and proper' proper' grounds rests with APRA.
grounds on application by APRA.
Court power of disqualification
New law Current law
The new disqualification regime While APRA has the power to
applies to all responsible persons disqualify an individual on `fit and
across APRA-regulated industries. proper' grounds under most
Specifically, the Court may disqualify Prudential Acts, such power is not
an individual on fit and proper consistent across industries. In
grounds from being or acting as: particular, APRA does not have the
power to disqualify on `fit and
· a director, senior manager or
proper' grounds:
auditor for an authorised deposit-
taking institution (ADI) or an · a director, principle executive
authorised none-operating holding officer, auditor or actuary under
company (NOHC) under the the Life Act; or
Banking Act; or · an auditor under the Banking
· a director, senior manager, Act; or
auditor and actuary for a general · an actuary under the SIS Act.
insurer, a senior manager or agent
in Australia for a foreign general
insurer, or a director or senior
manager of an authorised NOHC
under the Insurance Act; or
· a director, principle executive
officer, auditor or actuary for a
registered life company under the
Life Act; or
· an individual trustee, auditor or
actuary for a regulated
superannuation entity other than a
SMSF) under the SIS Act; or
· a director, secretary or executive
officer for a body corporate that is
a trustee, investment manager or
custodian of a regulated
superannuation entity(other than a
SMSF) under the SIS Act.
The Court may, on application by Under the RSA Act, APRA is able to
APRA, disqualify a person from disqualify a person from being or
being or acting as an approved acting as an approved auditor of an
auditor of an RSA provider under the RSA provider if APRA is satisfied
RSA Act if it is satisfied that the that the person has failed to perform
person has failed to perform the the required duties or functions or is
required duties or functions or is otherwise not a fit and proper person.
otherwise not a fit and proper person.
The Court may disqualify an An APRA-determined
individual from a position or disqualification is permanent and
positions in a specific entity, a class prohibits a disqualified person from
of entities or all entities for a period holding any responsible person
7
New law Current law
that the Court considers appropriate. position from that industry.
A disqualification order by the Court A disqualification decision is subject
is subject to the normal court-based to internal review by APRA and
appeals process. It is not subject to merits review by the AAT.
internal review by APRA or merits
review by the AAT.
Offence provisions for contravening Offence provisions for contravening
a disqualification order by the Court an APRA disqualification order are
are harmonised across the Prudential inconsistent among the Prudential
Acts and the RSA Act, largely based Acts and the RSA Act. In particular:
on the current arrangements under the · the penalty level for a
Banking Act and Insurance Act. contravention is inconsistent
Offences of strict liablity are across legislation; and
introduced into the Life Act, RSA
· there is no strict liability offence
Act and SIS Act. Specific defence
in the Life Act, the RSA Act or
provisions are removed from the
offence provisions concerning a
Banking Act and Insurance Act.
disqualified person acting as an
investment manager or custodian
of a superannuation entity under
the SIS Act.
Specific defence provisions under the
Banking Act and Insurance Act are
redundant given the availability of a
general defence (of mistake of fact)
under the Criminal Code.
Detailed explanation of new law
Part 1 Amendments commencing on Royal Assent
.1 The fit and proper criteria set out in APRA's prudential standards and
operating standards under the SIS Act seek to ensure individuals holding
important positions in APRA-regulated entities have the appropriate
expertise and experience and are of good fame and character. The
disqualification regime in turn plays a critical role in ensuring that
individuals who fail to meet these standards are prevented from operating
a financial sector entity. Hence, it is important that the disqualification
regime is robust and consistent across industries where appropriate.
.2 On the other hand, disqualification could have a significant
reputational impact on an affected individual or entity. It is important that
the disqualification process is transparent and efficient.
Court power of disqualification
.3 In addition, as most APRA-regulated entities are also subject to
regulation under the Corporations Act, it is preferable that the
disqualification processes under the two regulatory frameworks are
suitably aligned to ensure that the disqualification decisions are subject to
a consistent level of scrutiny.
.4 Schedule 1 of the Bill introduces into each of the Prudential Acts and
the RSA Act a court-based disqualification regime for responsible persons
in relation to APRA-regulated entities and approved auditors for RSA
providers, similar to the regime available to ASIC under the Corporations
Act.
.5 Under the new regime, the Federal Court may, on application by
APRA, disqualify an individual from being or acting as:
· a director, senior manager or auditor for an ADI or an
authorised NOHC under the Banking Act (item 7 section
21); or
· a director, senior manager, auditor or actuary for a general
insurer or a senior manager or agent in Australia for a
foreign general insurer or a director or senior manager of an
authorised NOHC under the Insurance Act (item 13 section
25A and item 17 section 44); or
· a director, principal executive officer, appointed actuary or
auditor for a registered life insurance company under the
Life Act (item 33 section 245A); or
· an approved auditor of an RSA provider under the RSA Act
(item 38 section 67); or
· an individual trustee of a superannuation entity (other than a
SMSF), a director, secretary or executive officer of a body
corporate that is a trustee, investment manager or custodian
of a superannuation entity (other than a SMSF), or an
auditor or actuary of a superannuation entity (other than
SMSF) under the SIS Act (item 57 section 126H and
item 61 section 130D).
.6 The new regime allows a greater level of flexibility with regard to the
nature of a disqualification. In particular, the Court has discretion to
disqualify a person from holding a position or positions within an entity, a
class of entities or all entities for a period that it considers appropriate in
the circumstances under all Prudential Acts and the RSA Act.
9
.7 The Court may also subsequently revoke or vary a disqualification
order if it sees fit to do so (item 7 section 22 of the Banking Act, item 13
section 26 of the Insurance Act, item 17 section 45 of the Insurance Act,
item 33 section 245B of the Life Act, item 38 section 67A of the RSA
Act, item 57 section 126J and item 61 section 130E of the SIS Act).
.8 Items 2-3, 10, 17 (section 43A of the Insurance Act), 32, 38 (section
67B of the RSA Act), 57 (section 126K of the SIS Act) and 67 (section
131C of the SIS Act) harmonise the offence provisions for contravening a
disqualification order under the Prudential Acts and the RSA Act, based
on the current arrangements in the Banking Act and Insurance Act. These
amendments also seek to ensure that the offence provisions are compatible
with the new disqualification regime, where it has been expanded to
include auditors of ADIs, actuaries of superannuation entities and
responsible persons of life companies, and to reflect that a person may be
disqualified from any position or positions of a specific entity, a class of
entities or all entities.
.9 Under the harmonised offence provisions, a person commits an
offence if the person acts in a role from which the person has been
disqualified. A person who contravenes this provision is subject to a
fault-based offence that carries a penalty of imprisonment for two years or
a strict liability offence of 60 penalty units.
.10 In addition, under the Prudential Acts, a body corporate commits an
offence if the body corporate allows a disqualified person to act in a role
from which the person has been disqualified. The penalty is 250 penalty
units or 60 penalty units for a strict liability offence.
.11 Offences of strict liability do not require proof of a mental element.
They are offences for non-compliance with basic regulatory requirements
that should be complied by all persons. The use of offences of strict
liability is designed to enhance the effectiveness of the enforcement
regime in deterring contraventions of key prudential requirements.
.12 Items 4, 10 and 32 repeal from the Banking Act, Insurance Act and
Life Act the subsections that provide a specific defence in a prosecution
where the body corporate contacted APRA before allowing the person to
act as a responsible officer and was incorrectly advised by APRA that the
person was not disqualified. These specific provisions are redundant as a
more general defence (of mistake of fact) can be claimed under the
Criminal Code.
.13 The court-based disqualification regime will not apply to responsible
persons in relation to SMSFs which are regulated by the ATO. Items 54
(section 126A), 62 and 63 retain the current power of the Commissioner
of Taxation to disqualify an individual from being or acting as a
Court power of disqualification
responsible person relating to a SMSF. In addition, the amendments also
extend the disqualification power of the Commissioner of Taxation to
include actuaries of a SMSF.
Application and transitional provisions
.14 The amendments made under part 1 of Schedule 1 (items 1-70) apply
from the date of Royal Assent.
.15 Item 34 clarifies that the disqualification power introduced into the
Life Act under item 33 applies in relation to conduct that has occurred
before or after the commencement of section 245A. This is to ensure all
conduct that may warrant a disqualification is captured under the new law,
consistent with arrangements under the other Prudential Acts.
.16 Transitional measures are introduced into the Banking Act (item 9),
Insurance Act (item 21), RSA Act (item 40) and SIS Act (item 70) to
allow existing disqualifications by APRA and subsequent determinations
to vary or revoke such disqualifications by APRA or the AAT to continue
in force after the date of Royal Assent. The transitional measures also
allow the AAT to continue hearing cases that are still before it at the day
of Royal Assent.
.17 These measures ensure a smooth and equitable transition from the
current APRA-determined disqualification regime to the new court-based
disqualification regime.
Consequential amendments
Part 1 Amendments commencing on Royal Assent
.18 Item 1 allows APRA to direct an ADI to remove a disqualified
auditor under the Banking Act. This is a consequential amendment to
item 7 which expands the disqualification regime to auditors of ADIs.
APRA currently has power to direct an ADI to remove an auditor on fit
and proper grounds which are similar to grounds for the Court to
disqualify an auditor under the new court-based regime.
.19 Items 8, 14 and 68 amend the Banking Act, Insurance Act and the SIS
Act to ensure that APRA is only able to remove a person from a position
or positions that the person is disqualified from holding under these Acts.
They are consequential amendments to items 7, 13 and 57 which
introduce a more flexible court-based disqualification process into the
11
relevant Acts where an individual may be disqualified from holding a
position or positions of a regulated entity, a class of regulated entities or
all regulated entities.
.20 The items 15 and 16 ensure that references to disqualification are
updated to reflect the introduction of the court-based disqualification
process in the Insurance Act under items 13 and 17. In simple terms,
references to APRA's determination that a person is disqualified will be
replaced by references to a court-based disqualification order.
.21 Item 15 removes a reference to an APRA determination under section
44 and inserts a reference to a court order under section 44, to reflect the
new court-based disqualification system.
.22 Item 16 amends the new subsection 43(1)(c) by replacing the
reference to an APRA determination with a reference to a court order, to
reflect the new court-based disqualification system.
.23 Items 18 and 19 amend subsection 48(1) and 48(2) so that APRA
may issue a direction to remove the auditor or actuary if the person has
been disqualified by a court under section 44.
.24 Item 64 of the SPR Act inserts a new subsection 48(4) which
provides that APRA may direct the removal of the auditor or actuary
whether or not APRA has disqualified the person. This provision is
incorrect with the introduction of the court-based disqualification regime.
Therefore, item 20 removes the new subsection 48(4).
.25 Items 5, 6, 11, and 12 replace references to `APRA' with references
to `the Federal Court of Australia' under the Banking Act and Insurance
Act as a result of the change from an APRA-determined disqualification
regime to a court-based disqualification regime effected through items 7
and 13.
.26 Item 30 replaces the reference to `this section' in subsection 245(1) of
the Life Act with a reference of `this Act' to account for the introduction
of a new section concerning the Court power to disqualify a person on fit
and proper grounds through item 33.
.27 Item 28 inserts a new power for APRA to direct the removal of the
auditor or actuary of a life company. This is modelled on similar
directions powers currently found in the Banking Act and SIS Act. The
SPR Act inserts this directions power under the Insurance Act. The SPR
Act was the main vehicle to make such directions powers consistent
across the four Prudential Acts, as such it is only appropriate to give
APRA this directions power. The SPR Act removes section 125A, and so
this section number can be re-used here.
Court power of disqualification
.28 Item 29 makes directions issued under the new section 125A subject
to merits review, by adding a new paragraph (za) under subsection 236(1)
of the Life Act.
.29 Item 31 adds a reference to a court-ordered disqualification to the
definition of a disqualified person under subsection 245(1) of the Life
Act, also consequential to item 33.
.30 The SPR Act, removes the requirement under the Life Act for APRA
to approve the appointment of the auditor and actuary of a life company,
and remove APRA's power to revoke its approval of the auditor and
actuary. A life company would be required to notify APRA when it
appoints the auditor or actuary, and instead of revoking its approval of a
person, the SPR Act gives APRA the powers to declare an individual
`ineligible' to be appointed as the auditor or actuary of a life company.
.31 Under the RPD Bill, APRA's power to apply to the court to
disqualify the auditor or actuary of a life company replaces APRA's
power to make `ineligibility' declarations. Therefore, items 24 and 27
remove APRA's power to make these declarations, by repealing the
sections 86 (relating to auditors) and 94A (relating to actuaries) inserted
by the SPR Bill. References to APRA's `ineligibility' declarations need
to be replaced with reference to disqualification orders made by the court
under the new section 245A.
.32 Items 22, 23, 25 and 26 replace references to APRA's `ineligibility'
declarations with reference to the new disqualification orders made by the
court in paragraphs 84(b) and 85(1)(c), in relation to auditors, and
paragraphs 93(3)(b) and 94(1)(c), in relation to actuaries, respectively
.33 Item 41 updates the definition of approved auditor in subsection 10(1)
of the SIS Act by inserting an exclusion for auditors who have been
disqualified by the Court under the new section 130D. This amendment is
consequential to the introduction of a Court power to disqualify an auditor
of an APRA-regulated superannuation entity under item 61. Item 42
ensures updating the definition of approved auditor under item 41 does
not unduly affect the continuity of any regulations made for the purposes
of that definition.
.34 In addition, items 41 and 47 together ensure the definition of an
approved auditor under the SIS Act reflect the more flexible court-based
disqualification regime introduced under item 61 where an individual may
be disqualified from being or acting as an auditor for a regulated
superannuation entity, a class of regulated superannuation entities or all
regulated superannuation entities.
13
.35 Similarly, items 35 and 37 respectively amend section 16 and
subsection 65(1) of the RSA Act in relation to the definition of approved
auditor to reflect the enhanced level of flexibility in the new court-based
disqualification regime where the Court may disqualify a person from
being or acting as an auditor for a particular RSA provider, a class of RSA
providers or any RSA provider.
.36 Item 36 removes references to current disqualification provisions
from the list of reviewable decisions set out in section 16 of the RSA Act,
as a disqualification order by the Court under the new regime is not
subject to merits review. These amendments are consequential
amendments to item 38 which introduces the court-based disqualification
regime into the RSA Act.
.37 Item 39 amends subsection 68(3) of the RSA Act to replace the
reference to an APRA disqualification with a reference to the new
court-ordered disqualification made under a new section 67, introduced
through item 38.
.38 Items 43, 44, 45 and 69 update the definition of reviewable decision
under subsections 10(1) and 344(12) of the SIS Act to make clear that a
disqualification order made by the Court is not a reviewable decision,
whilst a disqualification decision made by the Commissioner of Taxation
continues to be a reviewable decision. These amendments are
consequential to item 54, which preserves the power of the Commissioner
of Taxation to disqualify a responsible person in relation to a SMSF, and
item 57 to introduce a court power to disqualify a responsible person in
relation to an APRA-regulated superannuation entity.
.39 Item 46 is consequential to item 61 and. ensures that persons
disqualified under the new section 130D cannot act as the approved
auditor of a superannuation entity, for the purposes of their annual audit of
the entity's operations.
.40 Item 8, Schedule 3 of the SPR Act inserts a new requirement that,
each year, the trustee must appoint an approved auditor to provide a report
of the operations of the entity and the RSE licensee of the entity (if any).
Item 47 inserts a new subsection 113(1AA) to ensure that a person who
has been disqualified from acting as the entity's auditor under new section
130D cannot be the approved auditor.
.41 Item 49 amends subsection 120(1)(c) to ensure the definition of a
disqualified person includes individuals disqualified by both the
Commissioner of Taxation and the Court. This amendment is
consequential to amendments under item 54 (section 126A), preserving
the power of the Commissioner of Taxation to disqualify a responsible
person in relation to a SMSF and items 57(section 126H) and 61 (section
Court power of disqualification
130D) to introduce a Court power to disqualify a responsible person in
relation to an APRA-regulated superannuation entity.
.42 Items 50 and 51 amend section 120 of the SIS Act to ensure the
arrangements for automatically disqualifying a body corporate are
compatible with the court-based disqualification regime which provides
flexibility for an individual to be disqualified from holding a position or
positions within a regulated entity, a class of regulated entities or all
regulated entities. These amendments are consequential amendments to
item 57 which introduces a more flexible court-based disqualification
regime.
.43 Item 52 repeals section 120A of the SIS Act which has been replaced
by an ATO disqualification power and a court disqualification power
through amendments under items 54 and 57.
.44 Item 52 also repeals section 121 of the SIS Act as these offence
arrangements are now set out in section 126K, introduced under item 57.
.45 Item 54 repeals sections 126 and 126A of the SIS Act which prohibit
a disqualified person from acting as investment managers or custodians.
These prohibitions are now set out in the new section 126H of the SIS
Act, introduced through item 57.
.46 Items 48, 53, 58, 59, 60 and 64 insert titles for relevant divisions and
subdivisions applicable to the new disqualification framework under the
SIS Act. These are consequential amendments to items 54 and 57 which
establish the new disqualification framework.
.47 Item 55 repeals subsection 126D(1) of the SIS Act which sets out
APRA's power to waive a person's disqualification status. Under the new
regime introduced under items 57 (section 126H) and 61 (section 130D),
such power rests with the Court.
.48 Item 56 is a consequential amendment to item 54 (section 126A)
which introduces a separate division to retain the ATO's disqualification
power with respect to SMSFs under the SIS Act. Item 56 retains the
ATO's power to waive a person's disqualification status under subsection
126D(1A), while replacing the reference to `the Commissioner of
Taxation' with a reference to `the Regulator' so that references to the
Regulator are consistent through out that division.
.49 Item 65 replaces the reference to the current subsection 131(1) of the
SIS Act which sets out the Regulator's power to disqualify an auditor with
a reference to the new section 130D, which allows the Court to disqualify
an auditor or actuary in relation to an APRA-regulated superannuation
entity, and section 131, which allows the Commissioner of Taxation to
15
disqualify an auditor or actuary in relation to a SMSF. This is a
consequential amendment to items 54, 57, 62 and 63, which set out the
Court disqualification regime and the Regulator disqualification regime
respectively.
.50 As the SPR Act already inserted a new section 131AA in the SIS Act,
item 66 simply replaces the reference to section 131 in paragraph
131AA(2)(a) with a reference to section 130.
.51 Item 61 amends the heading of Division 3 of Part 16, to reflect the
new disqualification regime under the RPD Bill as well as APRA's new
power to direct the removal of auditors and actuaries under the SPR Act.
Part 2 Amendments contingent on the Financial Sector Legislation
Amendment (Discretionary Mutual Funds and Direct Offshore Foreign
Insurers) Act 2007
Insurance Act
Items 71 to 83
.52 In the DMF and DOFI Act, items 9A to 9G of Schedule 2 amend
sections 24 to 26 of the Insurance Act to add the concept of a `corporate
agent' of a direct foreign insurer. As the RPD Bill also amends sections
24 to 26, it is necessary to ensure that changes made by both pieces of
legislation are captured in the final version of the Insurance Act.
.53 Items 71 to 83 implement these changes based on two contingencies.
The first is that Schedule 2 of the DMF and DOFI Act commences before
the RPD Bill; the second is that the RPD Bill commences before Schedule
2 of the DMF and DOFI Act.
Schedule 2 of the DMF and DOFI Act commences before the RPD Bill
.54 The first contingency is dealt with by items 72 to 83. Items 9A to 9G
in Schedule 2 of the DMF and DOFI Act would have amended sections
24, 25, 25A and 26 of the Insurance Act by adding the concept of
`corporate agents'. These changes affect subsections 24(1), 24(4), 25(1),
25A(1), 25A(5), 26(6) and 26(8).
.55 When the RPD Bill commences, item 10 of the RPD Bill would
repeal subsections 24(1) to 24(7) of the Insurance Act and insert new
subsections 24(1) to 24(6) that do not contain references to `corporate
agents'. Item 11 of the RPD Bill would amend subsection 25(1) without
inserting a reference to corporate agents. Item 13 of the RPD Bill would
repeal sections 25A and 26 and insert new sections 25A and 26 that do not
Court power of disqualification
refer to corporate agents. To ensure that the changes in Schedule 2 of the
DMF and DOFI Act are still captured in the Insurance Act, it would be
necessary to add references to `corporate agents' in the new sections 24,
25 and 25A (the new section 26 does not need to refer to corporate
agents). This is done by items 72 to 82 in Part 2 of Schedule 1.
.56 Items 9H to 9V of Schedule 2 of the DMF and DOFI Act amends
section 27 of the Insurance Act by adding the concept of `corporate
agents'. When the RPD Bill commences, item 14 would repeal paragraph
27(2)(a) and insert a new paragraph 27(2)(a) into the Insurance Act that
does not contain a reference to corporate agents. Item 83 of the RPD Bill
would also add a reference to `corporate agents' to the new paragraph
27(2)(a), so as to ensure that it is consistent with the other subsections in
section 27.
.57 Items 72 to 83 would commence when both the RPD Bill and DMF
and DOFI Act have commenced, whichever is later.
RPD Bill commences before Schedule 2 of the DMF and DOFI Act
.58 In the second contingency, where the RPD Bill commences before
Schedule 2 of the DMF and DOFI Act , item 71 would be triggered as
well as items 72 to 83.
.59 As described above, before Schedule 2 of the DMF and DOFI Act
commences, items 10, 11 and 13 of the RPD Bill would repeal and replace
the old subsections 24(1), 24(4), 25A(1) and 25A(5).
.60 As a result, items 9A to 9G of Schedule 2 of the DMF and DOFI Act
would be `misdescribed amendments' and would not insert references to
`corporate agents' in sections 24 to 26 as intended. In this circumstance,
item 71 would remove these `misdescribed amendments'. Items 72 to 83
would then insert references to `corporate agents' in the new sections 24,
25A and 27(2)(a). This mechanism ensures that the policy intention of the
DMF and DOFI Act is still given effect.
17
2 Chapter 2
Direction powers
Outline of chapter
.1 Schedule 2 of the Bill amends the Banking Act 1959 (Banking Act),
Insurance Act 1973 (Insurance Act) and Life Insurance Act 1995 (Life
Act) to streamline APRA's specific direction powers, currently spread
through these Acts, into a general directions provision under each of these
Acts. Where appropriate, directions issued under the general directions
provision are subject to merits review by the Administrative Appeals
Tribunal (the AAT).
.2 Schedule 2 of the Bill also amends the Superannuation Industry
(Supervision) Act 1993 (SIS Act) to incorporate a materiality test into the
trigger for APRA to issue a direction to freeze assets of a superannuation
entity.
Context of amendments
.3 The Banking Act, Insurance Act and Life Act have evolved separately
and in response to specific industry developments at different times. As a
result, APRA's current direction powers are set out in different parts of
these Acts. The triggers, thresholds and requirements for the exercise of
these powers also vary considerably across legislation.
.4 In December 2006, a consultation paper Streamlining Prudential
Regulation: `Response to Rethinking Regulation', was released in which it
proposed to streamline APRA's specific direction powers into a general
directions provision where appropriate, thereby removing unnecessary
complexity and promoting consistency in APRA's directions regime.
.5 The proposal was further refined in light of industry comments and
was released on 31 May 2007 for further public comment through a
consultation paper Review of Prudential Decisions. The revised proposal
specifies clearly the circumstances where an APRA direction is subject to
merits review. The amendments in Schedule 2 of the Bill give effect to
this proposal.
19
Summary of new law
.6 The amendments in Schedule 2 streamline APRA's specific direction
powers currently spread through the Banking Act, Insurance Act and Life
Act into a general directions provision under each of these Acts.
.7 An APRA direction issued under the general directions provisions is
subject to merits review if it is issued as a result of certain triggers
specified in that provision being invoked.
Comparison of key features of new law and current law
New law Current law
A harmonised general directions APRA's direction powers are set out in
provision will replace the various different parts of the Banking Act,
specific powers for APRA to issue Insurance Act and Life Act. The
directions concerning entity-level triggers, thresholds and requirements for
activities under the Banking Act, the exercise of these powers vary
Insurance Act and Life Act. considerably across legislation.
The general directions provisions Most of APRA's current direction
set out the triggers for APRA to decisions, particularly those triggered by
issue a direction and specify what entity-level factors, are not subject to
triggers, if invoked, will subject merits review.
the resultant directions to merits
review.
APRA or the ATO can only issue APRA or the ATO (in the case of
a direction to freeze a SMSFs) can issue a direction to freeze a
superannuation entity's assets if it superannuation entity's assets if it
appears to APRA or the ATO (as appears to APRA or the ATO (as the
the case requires) that the entity's case requires) that the entity's conduct is
conduct is likely to adversely likely to affect adversely the values of
affect the values of the interests of the interests of beneficiaries.
beneficiaries to a significant
extent.
Detailed explanation of new law
Part 1 Amendments commencing on Royal Assent
.1 Effective direction powers, allowing rapid and decisive action to deal
with emerging prudential concerns and protect beneficiaries, promote
confidence in the effectiveness of prudential supervision and the safety of
financial sector entities.
Court power of disqualification
.2 While APRA currently has a wide range of direction powers under the
Banking Act, Insurance Act and Life Act, these powers are spread through
out each Act and, in some cases, are fragmented and inconsistent. The
triggers, thresholds and requirements for the exercise of these powers vary
considerably across the legislation. These make the directions regimes
under these Acts unnecessarily complex and promote uncertainty as to
their scope and application.
.3 Furthermore, direction powers are strong intervention tools, which
could have a significant impact on affected entities or individuals.
Accordingly, directions should be subject to appropriate review.
Currently, the majority of APRA's direction powers, particularly those
triggered by entity-level factors are not subject to merits review.
.4 In considering the review mechanism and scope for reviewing
APRA's direction decisions, it is important to balance fair treatment for a
person or entity affected by an APRA direction with ensuring that APRA
can act decisively where it is necessary in the public interest. Broadly
speaking, merits review should be made available for APRA directions
that affect a specific individual or entity, except where failure by APRA to
act immediately would materially prejudice the national interest, the
interests of beneficiaries or the stability of Australia's financial system.
.5 Schedule 2 of the Bill streamlines and harmonises APRA's specific
powers to issue directions triggered by entity-level activities into a general
directions provision under the Banking Act, Insurance Act and Life Act.
Amendments to establish the general directions framework
.6 Item 1, item 12 and item 19 set out a harmonised set of triggers for
APRA to issue a direction under the general directions provisions under
the Banking Act, Insurance Act and Life Act respectively. These triggers
are similar to the triggers currently set out in section 11CA of the Banking
Act and section 230B of the Life Act and are summarised in Table 1
below.
21
Table 1: Triggers for APRA to issue a direction under the Banking
Act, Insurance Act and Life Act
Part A: Under the new general directions provisions, APRA is able to
issue a direction, which is subject to merits review by the AAT, if it
has reason to believe that:
· the entity has contravened the relevant Prudential Act, FSCODA, a
prudential regulation or prudential standard; or
· the entity is likely to contravene the relevant Prudential Act, FSCODA, a
prudential regulation or prudential standard, and such a contravention is
likely to give rise to a prudential risk; or
· the entity has contravened a condition or direction under the relevant
Prudential Act or FSCODA; or
· the direction is necessary in the interests of depositors, policyholders or
beneficiaries.
Part B: Under the new general directions provision, APRA is able to
issue a direction, which is not subject to merits review by the AAT, if it
has reason to believe that:
· the entity is, or is about to become, unable to meet its liabilities; or
· there is, or there might be, a material risk to the security of the entity's
assets; or
· there has been, or there might be, a sudden material deterioration in the
entity's financial condition; or
· the entity is conducting its affairs in an improper or financially unsound
way; or
· the failure to issue a direction would materially prejudice the interests of
the depositors, policyholders or beneficiaries; or
· the entity is conducting its affairs in a way that may cause or promote
instability in the Australian financial system.
.1 As set out in Part A of Table 1 above, the amendments expand the
availability of merits review for appropriate APRA directions. Application
of merits review is set out in Schedule 2, item 12 subsection 104 (10) of
the Insurance Act and Schedule 4 items 7 and 35 in relation to the
Banking Act and Life Act.
.2 An APRA direction is not subject to merits review if it is issued
because one of the triggers in Part B of Table 1 is invoked. Triggers in
Part B contain appropriate materiality tests and are serious situations
where failure by APRA to act immediately would materially prejudice the
interests of depositors, policyholders or beneficiaries, or the stability of
the Australian financial system.
Court power of disqualification
.3 Item 1 subsection 1(1A), item 12 subsection 104 (2) and item 19
subsection 230B(1A) introduce a requirement into the Banking Act,
Insurance Act and Life Act for APRA to specify the ground on which a
direction is given in its written notice to the entity it directs. This
requirement is designed to ensure the availability of merits review for that
direction is made clear to the target of the direction, given that the
availability of merits review for an APRA direction is dependent upon the
trigger for the direction.
.4 Items 2, 20 and 22 address gaps in the general directions powers in
the Banking Act and Life Act so that APRA is able to issue directions to
comply with the whole or a part of the Banking Act or FSCODA a
condition or direction issued under the respective Act or FSCODA, and
relating to the amount of capital to be held by a life insurer. Item 12
(subsection 104(3)) sets out the types of directions that may be given
under the general directions power under the Insurance Act. Collectively,
these amendments harmonise the range of directions that APRA may give
under the Banking Act, Insurance Act and Life Act and address some
specific gaps. The range of directions that may be given by APRA as a
result of the amendments are summarised in Table 2 below:
Table 2: The types of directions that APRA is able to issue under
the Banking Act, Insurance Act and Life Act
Under the new general directions provisions, when any of the triggers
set out in Table 1 is satisfied, APRA is able to direct an entity:
· to comply with the whole or a part of the relevant Prudential Act,
FSCODA, a prudential regulation or prudential standard; or
· to comply with a condition or direction made under the relevant Prudential
Act or the FSCODA; or
· to order an audit of the affairs of the entity, at the expense of the entity, by
an auditor chosen by APRA; or
· if the entity is an insurer--to order an actuarial investigation of the affairs
of the entity, at the expense of the entity, by an actuary chosen by APRA or
· to remove a director, senior manager, auditor or actuary (where relevant to
the Act) from office; or
· to ensure a director or senior manager does not take part in the
management or conduct of the business of the entity except as permitted by
APRA; or
· to appoint a person or persons as a director, senior manager, auditor or
actuary of the entity for such term as APRA directs; or
· to remove any auditor of the entity from office and appoint another auditor
to hold office for such term as APRA directs; or
· if the entity is an insurer--to terminate the appointment of the actuary
23
Under the new general directions provisions, when any of the triggers
set out in Table 1 is satisfied, APRA is able to direct an entity:
appointed by the entity and to appoint another actuary to hold office for
such term as APRA directs; or
· not to give financial accommodation to any person; or
· if the entity is an insurer--not to issue any policy, undertake liability
under any contract of insurance or accept any premium; or
· if the entity is an ADI--not to accept the deposit of any amount; or
· if the entity is a general insurer--not to renew any policy; or
· not to borrow any amount; or
· not to accept any payment on account of share capital, except payments in
respect of calls that fell due before the direction was given; or
· not to repay any amount paid on shares; or
· not to pay a dividend on any shares; or
· if the entity is an insurer--not to discharge any policy or other liability; or
· if the entity is an ADI--not to repay any money on deposit or advance; or
· not to pay or transfer any amount to any person, or create an obligation
(contingent or otherwise) to do so; or
· not to undertake any financial obligation (contingent or otherwise) on
behalf of any other person;1 or
· if the entity is a general insurer--to provide, or further provide, in its
accounts for the purposes of the relevant Prudential Act and prudential
standards, a specified amount or an amount determined in a specified way
in respect of its liabilities or the value of a specified asset of the entity; or
· if the entity is a life insurer--not to transfer any asset of a statutory fund;
or
· if the entity is a life insurer--to do a specific act concerning the amount of
capital held; or
· to do anything else as to the way in which the affairs of the entity are to be
conducted or not conducted.
Amendments to the Insurance Act to harmonise general aspects of
APRA's directions powers
.1 As there is no comprehensive directions provision in the Insurance
Act at present, amendments are also made to set out various general
1
A direction not to pay or transfer any amount does not apply to the payment or
transfer of money under an order of a court or a process of execution.
Court power of disqualification
aspects of the operation of the general directions power under the
Insurance Act, consistent with current arrangements under the Banking
Act and Life Act. These amendments are contained in item 12, including:
· subsection 104(4) which allows the direction to be flexibly
applied to part of the matters, a class or classes of the
matters, or different matters referred to in the types of
directions set out in Table 2;
· subsection 104(5) which allows a direction to specify a time
period for it to be complied with;
· subsections 104(6) and (7) which require a body corporate
or subsidiary to comply with a direction despite anything in
its constitution or other contractual obligations;
· section 105 which sets out that a direction is not grounds for
a denial of contractual obligations and that a party to a
contract may apply to the Federal Court for an order relating
to the effect on the contract of a direction;
· subsection 106(1) which allows APRA to publish notice of
directions in Gazette and inform the Treasurer of a direction;
· subsection 106(2) which requires APRA to publish notice of
revocation of a direction as soon as practicable;
· subsection 106(3) which requires APRA to provide
information about a direction if the Treasurer so requires;
· subsection 106(4) which allows APRA to provide any
information that it considers appropriate to the Treasurer
about a direction or revocation of such a direction;
· subsection 106(5) which requires APRA to inform the
Treasurer of the revocation of a direction if it previously
informs the Treasurer about the making of the direction; and
· section 107 which sets out that information relating to
directions and revocations of directions (other than Gazetted
information) is subject to secrecy requirements under the
APRA Act.
.2 Item 12 section 108 sets out penalties for non-compliance with a
direction under the Insurance Act, consistent with current arrangements
under the Banking Act and Life Act. Under section 108, it is an offence if
25
the entity contravenes a direction given to it by APRA, with the penalty
being 50 penalty units and an offence of strict liability. Furthermore, an
officer of a regulated entity would commit an offence if the officer fails to
take reasonable steps to ensure that the entity complies with a direction
given to it, with the penalty being 50 penalty units and an offence of strict
liability.
.3 These offences are ones of strict liability because they are basic,
objective requirements of APRA's prudential supervision functions, and
should be complied with by all persons. Strict liability offences are
necessary to ensure the integrity of the regulatory regime and do not
require proof of a mental element. They are designed to enhance the
effectiveness of the enforcement regime in deterring contraventions of key
prudential requirements.
Other amendments to the Banking Act, Insurance Act and Life Act
implementing the new general directions power
.4 Amendments are made to the Banking Act (item 4), Insurance Act
(item 12) subsections 104 (8) and (9) to ensure APRA's power to vary or
revoke a direction is explicit, consistent with current arrangements under
the Life Act.
.5 Items 3, 5 and 21 remove references to `secretary' and `employee' in
the Banking Act and Life Act directions powers. These items also replace
references to `executive officer' with references to `senior manager' under
these provisions. This ensures the directions power is targeted at
individuals who, under the prudential Acts, are ascribed prudential
functions, namely directors, senior managers and responsible persons.
.6 Items 5, 12 (subsection 104(11) of the Insurance Act) and 23 also
define the terms `senior manager', `director' and `affair of a body
corporate' under the relevant general directions provisions to remove
doubt about the scope and application of these powers.
Amendments to the SIS Act
.7 Item 26 introduces a materiality test into the trigger for APRA or the
ATO to issue a direction to freeze a superannuation entity's assets under
section 264 of the SIS Act. The amendment ensures that APRA or the
ATO may issue such a direction only if the superannuation entity's
conduct is likely to adversely affect the values of the interests of
beneficiaries to a significant extent. This more properly reflects the
circumstances in which such a direction should be given.
Court power of disqualification
Application and transitional provisions
.8 The amendments made under part 1 of Schedule 2 (items 1-27) apply
from the date of Royal Asset.
.9 In addition, item 6 clarifies that APRA's power to vary a direction
under the Banking Act which is introduced through item 4 applies to any
directions, whether given before or after item 4 commences. This is
consistent with existing arrangements in the Life Act.
.10 Items 16 and 25 clarify that directions made before the date of Royal
Assent under the specific directions provisions (sections 36, 49M, 49N,
51, 62 of the Insurance Act and sections 134 and 150 of the Life Act)
continue in force as if they were given under section 104 of the Insurance
Act and section 230B of the Life Act after the date of Royal Assent.
.11 Item 27 makes explicit that the materiality test introduced into section
264 of the SIS Act through item 26 applies to any direction after item 26
commences.
Consequential amendments
Part 1 Amendments commencing on Royal Assent
.12 Items 7, 8, 9, 11, 17 and 18 repeal various specific direction
provisions under the Insurance Act and Life Act. These specific direction
powers become redundant as similar powers are contained in the general
directions provision introduced through items 12 and 19.
.13 Items 10 and 13 replace references to previous specific direction
provisions (sections 62 and 49M) with reference to the new general
directions provision (section 104 of the Insurance Act). This is because
the specific directions are repealed and equivalent powers are
incorporated into the general directions provision (section 104) through
item 12.
.14 Item 14 removes references to sections 37 and 49P from the
Insurance Act as they are repealed through items 7 and 8.
.15 Item 15 replaces the references to `49M or subsection 62(9)' with the
reference to section 108 as sections 49M and 62 are repealed through
items 8 and 11 and equivalent, offence provisions are set out in section
108 introduced through item 12.
27
.16 Item 24 amends subsection 236(1) of the Life Act by removing
references to directions in the definition of reviewable decision which are
redundant due to the consolidation of the directions power.
2 Chapter 3
Removal of ministerial consent
Outline of chapter
.1 The amendments in Schedule 3 of the Bill remove ministerial consent
from administrative decisions made by the Australian Prudential
Regulation Authority (APRA) or the Australian Taxation Office (ATO)
under the Banking Act 1959 (Banking Act), Insurance Act 1973
(Insurance Act), Life Insurance Act 1995 (Life Act) and Superannuation
Industry (Supervision) Act 1993 (SIS Act) where wider policy interests are
not involved.
Context of amendments
.2 On 12 September 2003, the former Government released its final
response to the HIH Royal Commission Report, in which it accepted all of
the recommendations made by the HIH Royal Commission. This included
a recommendation that the Government consider removing the
requirement for the Treasurer's agreement to operational decisions
involving APRA's prudential oversight of general insurers
(Recommendation 22).
.3 This recommendation is consistent with a later recommendation by
the International Monetary Fund (IMF) in its 2006 Financial System
Stability Assessment (FSSA) of Australia to establish clearly the
independence of APRA.
.4 On 4 December 2006, a consultation paper Rethinking Regulation:
Report of the Taskforce on Reducing Regulatory Burdens on Business,
was released containing proposals to remove the requirement for the
Treasurer's consent from operational decisions made by APRA or the
ATO (in the case of SMSFs) where wider policy considerations are not
involved. The paper also contained related proposals resulting from the
proposed removal of the requirement for the Treasurer's consent,
including proposals relating to the regulation of Lloyd's insurers and the
triggers for APRA to initiate an investigation under the Insurance Act.
.5 The proposals were further refined in light of industry comments and
consulted on again through a subsequent consultation paper Review of
29
Prudential Decisions, released on 31 May 2007. The amendments in
Schedule 3 of the Bill give effect to these proposals.
Summary of new law
.6 The amendments in Schedule 3 of the Bill remove the requirement for
the Treasurer's prior agreement for certain decisions made by APRA or
the ATO (in the case of SMSFs) under the Insurance Act, Life Act and
SIS Act where these decisions do not involve wider policy considerations.
.7 There are also miscellaneous amendments to the Insurance Act to
remove regulatory gaps resulting from the removal of the Treasurer's
agreement in relation to certain administrative decisions. These include
introducing new triggers for APRA's investigation power and its direction
power in relation to security trust funds concerning Lloyd's, and
transferring the administration of Lloyd's $2 million security deposit from
the Treasurer to APRA.
Comparison of key features of new law and current law
New law Current law
Treasurer's agreement is no Treasurer's agreement is required for a
longer required for administrative range of administrative decisions made
decisions under the Insurance Act, by APRA or the ATO under the
Life Act and SIS Act that do not Insurance Act, Life Act and SIS Act.
involve wider policy issues.
Where a decision concerns
licensing and authorisation or
removal of a responsible person or
handling of a regulated entity's
assets merits review is made
available (also see Chapter 4 of
this explanatory memorandum of
merits review).
The Treasurer's agreement as a Under the Insurance Act, with
trigger to issue a `show cause' Treasurer's agreement, APRA may issue
notice under the Insurance Act is a notice to a general insurer or
replaced by a new trigger which authorised NOHC, requiring it to `show
allows APRA to issue a `show cause' within a prescribed time why
cause' notice if it appears to APRA should not investigate the whole
APRA that information in its or part of the business of the entity.
possession calls for an
investigation.
Removal of ministerial consent
New law Current law
Lloyd's, or a company nominated Under the Insurance Act, Lloyd's or a
by Lloyd's is required to lodge company nominated by Lloyd's is
with APRA a security deposit required to lodge with the Treasurer a
valued at $2 million. security deposit valued at $2 million.
The Treasurer's agreement to Pursuant to section 76 of the Insurance
directions in relation to Lloyds Act, with the Treasurer's agreement,
insurers is replaced by a new APRA is able to direct the trustee of a
trigger which allows APRA to designated security trust fund
issue a direction if it has reason to (concerning Lloyd's) with respect to its
believe that the provisioning for liabilities provisioning.
liabilities in the accounts of a
designated security trust fund is
insufficient. In addition, merits
review is made available for such
a direction.
Detailed explanation of the new law
Part 1 Amendments commencing on Royal Assent
.1 The involvement of the Treasurer in operational prudential decisions
made by APRA or the ATO runs the risk of blurring the lines of
accountability for those decisions. It is important to balance the need for
clear accountability of the regulators for the performance of their
functions against ensuring the clear independence of the Regulators in
their execution of administrative powers.
.2 While APRA and the ATO currently have independence for most of
their operational decisions in the administration of the Insurance Act, Life
Act and SIS Act there are several administrative decisions for which they
require the Treasurer's agreement.
.3 The removal of the Treasurer's agreement from operational decisions
will enhance the regulators' operational independence and improve the
timeliness and effectiveness of the supervisory process. It ensures
accountabilities are clearly allocated to the responsible decision-maker,
allowing the regulators to undertake and enforce their prudential powers
without giving rise to the perception that they are influenced by external
interference.
.4 The amendments in Schedule 3 of the Bill aim to achieve these goals
by removing from the Insurance Act, Life Act and SIS Act the
requirement for the Treasurer's prior agreement for administrative
31
decisions made by APRA or the ATO that do not involve broader policy
considerations. A summary of these amendments is set out in Table 3
below:
Table 3: Amendments to remove ministerial consent under the
Prudential Acts
Insurance Act 1973
Items 1 to 4 remove from sections 15 and 21 requirements for the Treasurer's
prior agreement to an APRA decision to revoke an authorisation of a general
insurer or an authorised NOHC under the Insurance Act.
Item 5 repeals subsection 32(3E) of the Insurance Act which requires APRA to
seek the Treasurer's prior agreement for a decision to modify a prudential
standard to cater for an in-house capital adequacy model proposed by an
insurer or vary or revoke such a modification.
Item 6 removes from section 52 of the Insurance Act the requirement for the
Treasurer's agreement prior to APRA issuing an investigation `show cause'
notice to a general insurer or an authorised NOHC.
This amendment, however, limits APRA's ability to use its investigation
powers in some situations to ensure financial system stability as the remaining
triggers are specific and have proven to be insufficient in the past.
To address this issue, item 6 also introduces a new trigger into paragraph
52(1)(b) of the Insurance Act which allows APRA to issue an investigation
`show cause' notice if it appears to APRA that information in its possession
calls for an investigation. A similar trigger is currently available to APRA
under the Banking Act and Life Act.
Item 7 removes from section 52 of the Insurance Act the requirement for the
Treasurer's agreement before APRA can specify in an investigation notice a
period of notice that is less than 14 days.
To ensure APRA has the flexibility to specify a notice period of less than 14
days where timeliness is of critical importance to protect the interests of policy
holders, item 7 inserts a new requirement into subsection 52(1AB) such that
APRA is permitted to specify a period of less than 14 days in a `show cause'
notice if APRA considers specifying a shorter period is necessary and the
period specified is reasonable in the circumstances.
Item 8 and Items 15 to 21 amend the Insurance Act to transfer the
administration of Lloyd's $2 million security deposit from the Treasurer to
APRA as a result of the removal of the Treasurer's agreement from the
Insurance Act. Item 17 further clarifies that under the new arrangements, the
legal and beneficial interest in these securities remains with the
Commonwealth and APRA is taken to have custody of the securities for and on
behalf of the Commonwealth.
Items 9 and 10 remove the requirement for APRA to seek the Treasurer's
agreement prior to issuing directing a Lloyd's underwriter to not issue or
renew policies under section 74.
Removal of ministerial consent
Insurance Act 1973
Items 11 and 12 remove the requirement for APRA to seek the Treasurer's
agreement prior to directing Lloyd's in relation to the provision of liabilities in
the accounts of designated security trust funds under section 76 of the
Insurance Act.
However, the amendment would result in such an APRA direction being
subject to no trigger mechanism. Item 11 clarifies that APRA may issue such a
direction if it has reason to believe that the provisioning for liabilities in the
accounts of the designated security trust fund is insufficient.
Items 13 and 14 remove the requirement for APRA to seek the Treasurer's
agreement prior to directing Lloyd's not to deal with certain assets.
Items 22 to 26 remove from section 93 of the Insurance Act the Treasurer's
involvement in determining that the authorisation of a Lloyd's underwriter
ceases to have effect.
Life Insurance Act 1995
Item 28 amends new section 21(1) to remove the requirement for APRA to
obtain ministerial consent.
Item 29 repeals subsection 40(3) of the Life Act so that the Treasurer's
agreement is no longer required for the regulator to approve a life company
mortgaging or issuing a charge over an asset of a statutory fund.
Item 30 removes from section 49 of the Life Act the requirement for APRA to
seek the Treasurer's agreement prior to giving notice to a life company to take
action to remedy a contravention of the duties of directors in relation to
statutory funds.
Item 31 repeals subsections 62(4A) and 63(2A) of the Life Act which require
APRA to seek the Treasurer's agreement prior to refusing to permit
distributions of retained profits or shareholder's capital in a statutory fund.
Superannuation Industry (Supervision) Act 1993
Items 32 to 34 remove from section 29G the requirement for APRA to seek the
Minister's consent prior to cancelling an RSE licence.
Item 35 removes from section 133 the requirement for APRA or the ATO to
seek the Minister's consent prior to suspending or removing a trustee of a
superannuation entity.
Items 36 and 37 remove from section 146 the requirement for APRA to seek
the Minister's consent prior to approving the transfer of all benefits of
members and beneficiaries in a transferor fund to a transferee fund.
Item 38 removes from section 264 the requirement for APRA or the ATO to
seek the Minister's consent prior to issuing a direction to freeze assets of a
superannuation entity.
33
Application and transitional provisions
.1 The amendments made under part 1 of Schedule 3 (items 1-31) apply
from the date of Royal Asset.
.2 Item 27 further clarifies that, for securities that are lodged with the
Treasurer under section 92Q of the Insurance Act immediately before the
date of Royal Assent, the legal and beneficial interest in the securities
remain with the Commonwealth, and APRA is taken to have custody of
the securities for and on behalf of the Commonwealth immediately after
the date of Royal Assent.
Part 2 Amendments contingent on the Financial Sector Legislation
Amendment (Discretionary Mutual Funds and Direct Offshore Foreign
Insurers) Act 2007
Items 39 to 67
.3 In the DMF and DOFI Act, item 8 of Schedule 2 inserts a new section
into the Insurance Act. The new section 3A provides for the Insurance
Regulations to specify that certain contracts are not taken to be insurance
business for the purposes of the Insurance Act. It provides the framing
provision to draft an Insurance Regulation exemption allowing Australian
risks that cannot be appropriately placed with an authorised insurer to be
placed with an unauthorised offshore general insurer without the general
insurer being in breach of the Insurance Act.
.4 New paragraph 3A(3)(b) extends the Insurance Act Part VI merits
review provisions to determinations that may be made pursuant to the
Insurance Regulations under the new section 3A. To make the new
section 3A merits review provisions effective, Schedule 2 of the DMF and
DOFI Act also amends sections 63 and 64 in Part VI of the Insurance Act.
.5 However, it was never intended that Part VI merits review provisions
should apply to commercial activities. This would occur, for example, if
the Insurance Regulations enabled insurance brokers to determine, on a
narrow and well-defined basis, that an exemption was required where a
risk could not be appropriately placed with an authorised insurer.
Amendments made in this Bill will ensure that such a determination
would not be subject to merits review under Part VI of the Insurance Act.
.6 A person who could have exercised their rights to merits review under
the provisions being repealed through this Bill would still, for example,
have a range of alternative remedies against an insurance broker. These
include legal remedies in common law (for example, breach of contract)
Removal of ministerial consent
and under statute (for example, an action against an insurance broker for
misleading and deceptive conduct).
.7 The repeal of these provisions also does not affect the Australian
Securities and Investments Commission's powers under Chapter 7 of the
Corporations Act 2001 to seek a fine, revoke an insurance broker's
Australian financial services licence or disqualify the insurance broker
from providing financial service advice.
.8 Items 13 to 17 of Schedule 2 of the DMF and DOFI Act amend
section 63 of the Insurance Act to remove the definitions `reviewable
decision of the Treasurer or APRA' and `person affected by a reviewable
decision of the Treasurer and APRA' (the old definitions), and insert the
definitions of `decision maker', `reviewable decision' and `person
affected by a reviewable decision' (the new definitions) instead.
.9 As outlined above, Schedule 2 of the DMF and DOFI Act also
amends sections 63 and 64 in Part VI of the Insurance Act.
.10 Items 18 to 33 of Schedule 2 of the DMF and DOFI Act replace
sections 63 and 64 references to the old definitions with references to the
new definitions.
.11 The DMF and DOFI Act changes affect subsections 63(1) and 63(2),
63(4) to (7), 63(9), and 63(12) to (14), and subsection 64(1), paragraphs
64(1)(a) and (b), subsection 64(2), and adds a new subsection 64(4).
.12 These changes are no longer necessary, from the perspective of the
DMF and DOFI Act, as a result of the amendments to section 3A of the
Insurance Act contained in this Bill.
.13 However, the RPD Bill also amends sections 63 and 64 to remove the
requirement to seek ministerial consent. When the RPD Bill commences,
it is intended that all references to the Treasurer, and thus ministerial
consent, would be removed from the Prudential Acts.
.14 To ensure that references to the Treasurer are removed from sections
63 and 64, irrespective of whether the RPD Bill commences before or
after Schedule 2 of the DMF and DOFI Act, it is necessary to remove
references to the Treasurer from both the old definitions and the new
definitions in section 63, and from the relevant subsections or paragraphs
in sections 63 and 64.
.15 This ensures that changes made by both pieces of legislation are
captured in the final version of the Insurance Act.
35
.16 Items 39 to 67 of Part 2 of Schedule 3 of the RPD Bill implement
these changes based on two contingencies. The first is that the DMF and
DOFI Act commences before the RPD Bill, the second is that the RPD
Bill commences before the DMF and DOFI Act.
Schedule 2 of the DMF and DOFI Act commences before RPD Bill
.17 The first contingency is dealt with by Division 1 of Part 2, of
Schedule 3.
.18 If the DMF and DOFI Act commences before the RPD Bill, it would
be only necessary to repeal the sections extending merits review to
determinations made in regulations under section 3A of the Insurance Act.
Item 40 of Division 1 in Part 2 of Schedule 3 repeals section 3A of the
DMF and DOFI Act and inserts a new section 3A into the Insurance Act.
Items 41 to 43 of Division 1 in Part 2 of Schedule 3 removes references to
determinations made under section 3A and the Treasurer from the new
definitions. These items would commence when the RPD Bill receives
Royal Assent.
.19 The DMF and DOFI Act would have already removed all other
references to the Treasurer in sections 63 and 64 and replaced them with
references to the `decision maker' (that is, APRA).
.20 Item 39 also makes a consequential amendment to a note regarding
the definition of insurance business in subsection 3(1) of the Insurance
Act. The note makes readers aware that some contracts of insurance are
not insurance business because of the operation of the new section 3A.
RPD Bill commences before Schedule 2 of the DMF and DOFI Act
.21 The second contingency is dealt with by Divisions 2 and 3 of Part 2
of Schedule 3.
.22 If the DMF and DOFI Act commences after the RPD Bill it will be
necessary to, firstly, remove references to the Treasurer from the old
definitions and, once Schedule 2 of the DMF and DOFI Act has
commenced, remove references to the Treasurer from the new definitions.
It will also be necessary to repeal section 3A of the DMF and DOFI Act
and insert the new section 3A via this Bill. This is effected by Division 2
and 3 in Part 3.
.23 Division 2, consisting of items 44 to 64, removes references to the
Treasurer from the old definitions as well as subsections 63(1) and (2),
63(4) to (7), 63(9), 63(12) and (13), subsection 64(1), paragraphs 64(1)(a)
and (b) and subsection 64(2). Division 2 will come into effect when the
Removal of ministerial consent
Bill receives Royal Assent, so that these references to the Treasurer are
removed at the same time as Part 1 of Schedule 3.
.24 Item 65 of Division 3 repeals item 8 of Schedule 2 of the DMF and
DOFI Act (the old section 3A) and inserts a new item 8 of Schedule 2 (the
new section 3A). Item 65 commences immediately before the
commencement of Schedule 2 of the DMF and DOFI Act and after the
RPD Bill has commenced.
.25 In addition, item 66 of Division 3 of Part 2 of Schedule 3 of the RPD
Bill removes `misdescribed provisions' in the DMF and DOFI Act.
.26 If the RPD Bill commences before Schedule 2 of the DMF and DOFI
Act, items 44 to 48 will have already inserted the new definitions in
subsection 63(1); items 49 to 63 will have already removed references to
the Treasurer in subsections 63(2), 63(4) to (7), 63(9), 63(12) to (13),
subsection 64(1), paragraphs 64(1)(a) and (b) and subsection 64(2); and
item 64 will have already inserted a new subsection 64(4). As a result of
these changes, items 13 to 33 in Schedule 2 of the DMF and DOFI Act
will have become `misdescribed provisions', which will not produce the
intended effect.
.27 Item 66 commences just before Schedule 2 of the DMF and DOFI
Act commences.
.28 Item 67 then makes a consequential amendment to a note regarding
the definition of insurance business in subsection 3(1) of the Insurance
Act. The note makes readers aware that some contracts of insurance are
not insurance business because of the operation of the new section 3A.
Item 67 commences immediately after item 5 of Schedule 2 of the DMF
and DOFI Act.
37
2 Chapter 4
Review of decisions
Outline of chapter
.1 Schedule 4 of the Bill amends the Banking Act 1959 (Banking Act),
Insurance Act 1973 (Insurance Act), Life Insurance Act 1995 (Life Act),
Superannuation Industry (Supervision) Act 1993 (SIS Act) (collectively,
the Prudential Acts) and the Financial Sector (Collection of Data) Act
2001 (FSCODA) to expand the availability of merits review for
appropriate administrative decisions made by the Australian Prudential
Regulation Authority (APRA) or the Australian Taxation Office (the
ATO) (in the case of self managed superannuation funds (SMSFs)),
consistent with the guidelines regarding merits review developed by the
Administrative Review Council (the ARC).
Context of amendments
.2 In its response to the HIH Royal Commission Report, the former
Government accepted all of the HIH Royal Commission
recommendations, including a recommendation that the Government
review the inconsistencies between the legislative provisions for merits
review under the Insurance Act 1973 and the Banking Act 1959
(Recommendation 23).
.3 This is also consistent with Recommendation 5.7 of Rethinking
Regulation: Report of the Taskforce on Reducing Regulatory Burdens on
Business (Rethinking Regulation), that APRA's administrative decisions
be subject to merits review consistent with the guidelines developed by
the ARC. The former Government accepted this recommendation in its
final response to Rethinking Regulation, released on 15 August 2006.
.4 On 4 December 2006, a proposals paper Streamlining Prudential
Regulation: Response to `Rethinking Regulation', was released canvassing
proposals to apply merits review to appropriate administrative decisions
made by APRA or the ATO in the case of SMSFs.
.5 The proposals were further revised in light of industry comments and
consulted on again through a subsequent consultation paper Review of
39
Prudential Decisions, released on 31 May 2007. The amendments in
Schedule 4 of the Bill give effect to these proposals.
Summary of new law
.6 Schedule 4 of the Bill amends the Prudential Acts and FSCODA to
apply merits review to appropriate decisions made by APRA or the ATO
(in the case of SMSFs), consistent with the ARC guidelines.
.7 In broad terms, merits review will be made available for decisions to
refuse to grant or revoke a licence, decisions to refuse to determine certain
provisions of a relevant Prudential Act do not apply, various decisions to
ensure compliance with minimum standards and appropriate direction
decisions.
.8 In addition, the automatic confidentiality provisions in relation to
AAT hearings are removed from each of the Prudential Acts to enhance
the transparency of the AAT process in respect of financial sector entities.
Under the new regime, the AAT has discretion on a case by case basis to
determine whether confidentiality should be provided through a private
hearing under subsection 35(2) of the Administrative Appeals Tribunal
Act 1975 (the AAT Act).
Comparison of key features of new law and current law
New law Current law
Merits review will be available for Merits review is not available for all
appropriate APRA/ATO decisions appropriate administrative decisions
consistent with the ARC made APRA or the ATO under the
guidelines. Prudential Acts and FSCODA.
These include decisions in relation
to licensing and authorisation,
exemption, compliance with
minimum standards and certain
directions (also see Chapter 2).
The general confidentiality All AAT hearings of administrative
provisions under the Prudential decisions are confidential under each of
Acts are removed. However, the Prudential Acts.
relevant persons may apply to the
AAT for a private hearing under
subsection 35(2) of the AAT Act.
Removal of ministerial consent
Detailed explanation of new law
Part 1 Amendments commencing on Royal Assent
.1 Merits review aims to ensure that all persons affected by a decision
receive fair treatment. It also improves the transparency of administrative
decisions and, where the regulators are seen to make consistent,
well-formulated decisions, should engender greater public confidence in
the regulatory framework.
.2 Merits review is currently available for most decisions made by
APRA or the ATO under the Prudential Acts which affect individuals.
However, there is inconsistent application of merits review for decisions
which may impact substantially on entities. Such inconsistency may
reduce the regulator's accountability for administrative decisions.
.3 In determining which decisions are appropriate for merits review, the
ARC guidelines have been taken into account. Consistent with these
guidelines, Schedule 4 of the Bill amends the Prudential Acts and
FSCODA to make merits review available for appropriate administrative
decisions made under these Acts.
.4 Items 1 and 2 amend sections 9 and 9A of the Banking Act to apply
merits review to an APRA refusal to grant or refusal to revoke an authority
to carry on banking business in Australia as well as decisions by APRA to
revoke an authority to carry on banking business where procedural fairness
processes apply. Similarly, items 4 and 5 amend sections 11AA and 11AB
of the Banking Act to apply merits review to an APRA decision to refuse
to grant or refuse to revoke a NOHC authority as well as a decision by
APRA to revoke an authority of a NOHC where procedural fairness
processes apply.
.5 Items 1 and 4 also expand the availability of merits review to APRA
decisions to impose conditions on an authority of an ADI or an authorised
NOHC or a subsequent decision to vary such conditions.
.6 Item 3 amends section 11 of the Banking Act to apply merits review to
an APRA refusal to determine that one or more provisions of the Banking
Act do not apply to a particular person or a subsequent variation or
revocation of an exemption order made under this section.
.7 Item 6 amends section 11AF of the Banking Act to apply merits
review to an APRA decision to determine a prudential standard for a
specific ADI or authorised NOHC or a subsequent decision to vary such a
standard.
41
.8 Item 7 applies merits review to directions given under section 11CA of
the Banking Act that are triggered by certain prescribed circumstances.
See Chapter 2 of this explanatory memorandum for further description of
amendments to directions powers in the Banking Act as a result of this
Bill.
.9 Item 9 applies merits review to an APRA refusal to certify an industry
support contract under section 11CB of the Banking Act.
.10 Item 10 makes explicit that APRA may vary a direction in relation to
compliance with an industry support contract under section 11CC of the
Banking Act. Item 11 applies merits review to APRA's decisions under
this section to give, vary or revoke such a direction.
.11 Item 13 applies merits review to an APRA decision under section 66
of the Banking Act to refuse to consent to a person assuming or using
certain restricted words or expressions in relation to the person's financial
business. Item 13 also applies merits review to an APRA decision to
impose conditions on a consent, to vary or revoke such a consent, or to
revoke such a consent.
.12 Item 14 applies merits review to an APRA decision under section 67
of the Banking Act to refuse to consent to the establishment or
maintenance of representative offices of overseas banks, to impose
conditions or additional conditions on a consent, to vary or revoke
conditions imposed on a consent, or to revoke a consent.
Financial Sector (Collection of Data) Act 2001
.13 Items 15 and 16 introduce into the FSCODA general arrangements
regarding review of decisions, consistent with arrangements under the
Prudential Acts.
.14 Item 17 applies merits review to APRA decisions:
· not to exempt a corporation from the obligation to register
under FSCODA (section 7);
· not to allow a longer period for the submission of required
documents to APRA (section 9);
· to include a registered entity in a particular category of
registered entities (section 11); and
· to determine or vary a reporting standard for an entity
(section 13).
Removal of ministerial consent
Insurance Act 1973
.15 Item 18 applies merits review to APRA decisions under section 7 of
the Insurance Act to refuse to determine that certain provisions of the
Insurance Act do not apply to a particular person, to impose conditions on
or specify a period in such a determination, or to vary or revoke such a
determination.
.16 Items 19 and 22 apply merits review to APRA decisions under
sections 13 and 19 of the Insurance Act to impose conditions on an
authorisation of a general insurer or an authorised NOHC or to vary such
conditions.
.17 Items 20 and 23 apply merits review to APRA decisions under
sections 15 and 21 of the Insurance Act to revoke an authorisation of a
general insurer or an authorised NOHC.
.18 Item 24 adds a new subsection 32(7) to specify that APRA's
decisions under new paragraph 32(1)(e), relating to one or more specified
general insurers, NOHCs and subsidiaries, are now subject to review
under Part VI of the Insurance Act.
.19 Item 21 applies merits review to APRA decisions under section 17 of
the Insurance Act to direct the insurer to arrange, subject to APRA's
approval, to assign certain liabilities to one or more other general insurers,
to refuse to approve a proposed assignment or to impose conditions on an
approval.
.20 Item 25 applies merits review to APRA decisions under section 49H
of the Insurance Act to confirm or vary a delegation's decision to extend
time for providing actuary's report.
.21 Item 27 applies merits review to APRA decisions under section 116A
of the Insurance Act to determine an amount in relation to an insurer's
assets liabilities in Australia or to vary such a determination.
Life Insurance Act 1995
.22 Currently, some decisions are included in both subsection 236(1) of
the Life Act, which sets out a definition of reviewable decisions and
236(1A) which sets out a definition of non-reviewable decisions. This
makes defining reviewable decisions under the Life Act unnecessarily
complex.
.23 Item 36 removes subsection 236(1A) so that reviewable decisions are
only listed in subsection 236(1) under the definition of reviewable
decisions. In addition, item 29 and item 32 remove various decisions from
the list of reviewable decision under subsection 236(1). These decisions
43
are not subject to merits review as they are currently included in both
subsections 236(1) and 236(1A). These amendments seek to improve the
clarity in defining reviewable decisions in the Life Act. Item 28 is a
consequential amendment as it removes a reference to subsection 236(1A).
.24 Items 29 to 31 and 33 to 34 apply merits review to APRA decisions
under the Life Act:
· to determine that a body corporate is a `friendly society' or
to vary or revoke such a determination (section 16C);
· to restrict the use of the expression `friendly society'
(section 16E);
· to refuse to approve benefit fund rules (section 16L) or to
refuse to approve amendments of approved benefit fund
rules (section 16Q);
· to give notice to require an amendment of approved benefit
fund rules to rectify deficiency or to refuse to approve such
amendments (section 16R);
· to refuse to give an approval to consequential amendments
of company's constitution (sections 16U and 16V);
· to refuse to register a company (section 21) or cancel the
registration of a company (section 27);
· to refuse to give approval or impose conditions on an
approval concerning mortgages of assets (section 40);
· to refuse to give an approval concerning investment of
statutory funds (section 43);
· to refuse to give an approval concerning directors' duties in
relation to statutory funds (section 48);
· to refuse to allow the overseas policy owners' retained
profits to be distributed to owners of Australian policies or
to be transferred to shareholders' funds (section 62);
· to refuse to suspend or vary a life company's obligation to
make payments (section 208);
· to direct a life company to do certain acts on certain grounds
specified in section 230B. See Chapter 2 of this explanatory
Removal of ministerial consent
memorandum for further description of amendments to
directions powers in the Life Act as a result of this Bill.
Superannuation Industry (Supervision) Act 1993
.25 Item 38 applies merits review to APRA directions to registrable
superannuation entity licensees to modify their risk management strategies
as set out in the directions (section 29HB).
.26 Item 39 applies merits review to APRA directions to registrable
superannuation entity licensees to modify their risk management plans as
set out in the directions (section 29PB).
.27 Item 40 applies merits review to the Regulator's refusal to approve the
provision of other benefits under the sole purpose test provision (section
62).
.28 Item 41 applies merits review to the Regulator's decision to suspend
or remove a trustee of a superannuation entity (section 133).
All Prudential Acts
.29 Currently, all AAT hearings of reviewable decisions are confidential
under each of the Prudential Acts. This reduces the publicly available
information on the rationale for, and the transparency of, the decisions
being reviewed.
.30 Items 12, 26, 37 and 42 remove the automatic confidentiality
provisions from each of the Prudential Acts to enhance the availability of
public information concerning the decisions being reviewed. Following
the amendments, where a private hearing is necessary, the relevant person
may apply to the AAT for a private hearing under subsection 35(2) of the
AAT Act.
Application and transitional provisions
.31 The amendments made under Schedule 4 (items 1-43) apply from the
date of Royal Asset.
.32 Item 43 further clarifies that these amendments apply to decisions
made on or after the day on which these amendments commence.
45
Consequential amendments
Part 1 Amendments commencing on Royal Assent
.33 Item 8 is a consequential amendment to item 9. It inserts (1) to allow
for a new subsection (2) to be inserted under item 9.
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