Financial Sector (Collection of Data) (reporting standard) determination No. 20 of 2018 (Cth)
Financial Sector (Collection of Data) (reporting standard) determination No. 20 of 2018
Reporting Standard ARS 320.8 Housing Loan Reconciliation
Financial Sector (Collection of Data) Act 2001
I, Alison Bliss, delegate of APRA, under paragraph 13(1)(a) of the Financial Sector (Collection of Data) Act 2001 (the Act) and subsection 33(3) of the Acts Interpretation Act 1901:
(a)REVOKE Financial Sector (Collection of Data) (reporting standard) determination No. 59 of 2008, including Reporting Standard ARS 320.8 Housing Loan Reconciliation made under that Determination; and
(b)DETERMINE Reporting Standard ARS 320.8 Housing Loan Reconciliation, in the form set out in the Schedule, which applies to the financial sector entities to the extent provided in paragraph 3 of the reporting standard.
Under section 15 of the Act, I DECLARE that the reporting standard shall begin to apply to those financial sector entities, and the revoked reporting standard shall cease to apply, on 1 April 2018.
This instrument commences on 1 April 2018.
Dated: 21 March 2018
[Signed]
Alison Bliss
General Manager
Data Analytics Division
Interpretation
In this Determination:
APRA means the Australian Prudential Regulation Authority.
financial sector entity has the meaning given by section 5 of the Act.
Schedule
Reporting Standard ARS 320.8 Housing Loan Reconciliation comprises the document commencing on the following page.
Reporting Standard ARS 320.8
Housing Loan Reconciliation
Objective of this Reporting Standard
This Reporting Standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001 and outlines the overall requirements for the provision of information to APRA relating to an authorised deposit-taking institution’s reconciliation of housing loans. It should be read in conjunction with Reporting Form ARF 320.8 Housing Loan Reconciliation and the associated instructions (both of which are attached and form part of this Reporting Standard).
Authority
This Reporting Standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001.
Purpose
Data collected in Reporting Form ARF 320.8 Housing Loan Reconciliation (ARF 320.8) is used by APRA for the purpose of prudential supervision. It may also be used by the Reserve Bank of Australia (RBA) and the Australian Bureau of Statistics (ABS). Published aggregate statistics from this collection are used for policy formulation by economists, State and Federal Governments and the housing industry.
Application and commencement
This Reporting Standard applies to an authorised deposit-taking institution (ADI) as set out in the table below. Only those ADIs with total housing loan assets greater than AUD 1 billion are required to complete this form.
Class of ADI Applicable Australian Owned Bank Yes Foreign Subsidiary Bank Yes Branch of a Foreign Bank Yes Building Society Yes Credit Union Yes Provider of Purchased Payment Facilities No Other ADI No
This Reporting Standard commences on 1 April 2018.
Information required
An ADI to which this Reporting Standard applies must provide APRA with the information required by ARF 320.8 for each reporting period.
Form and method of submission
The information required by this Reporting Standard must be given to APRA in electronic format, using the ‘Direct to APRA’ application or by a method notified by APRA, in writing, prior to submission.
Note: the Direct to APRA application software (also known as D2A) may be obtained from APRA.
Reporting periods and due dates
Subject to paragraph 8, an ADI to which this Reporting Standard applies must provide the information required by this Reporting Standard for each quarter based on the financial year (within the meaning of the Corporations Act 2001) of the ADI.
APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular ADI, to require it to provide the information required by this Reporting Standard more frequently, or less frequently, having regard to:
(a)the particular circumstances of the ADI;
(b)the extent to which the information is required for the purposes of the prudential supervision of the ADI; and
(c)the requirements of the RBA or the ABS.
The information required by this Reporting Standard must be provided to APRA in accordance with the table below. The right hand column of the table sets out the number of business days after the end of the reporting period to which the information relates within which information must be submitted to APRA by an ADI in the classes set out in the left hand column.
Class of ADI Number of business days Australian Owned Bank 20 Foreign Subsidiary Bank 20 Branch of a Foreign Bank 20 Building Society 15 Credit Union 15
APRA may grant an ADI an extension of a due date in writing; in which case the new due date for the provision of the information will be the date on the notice of extension.
Quality control
All information provided by an ADI under this Reporting Standard must be subject to processes and controls developed by the ADI for the internal review and authorisation of that information. These systems, processes and controls are to assure the completeness and reliability of the information provided.
Authorisation
When an ADI submits information under this Reporting Standard using the ‘Direct to APRA’ application, or other method notified by APRA, it will be necessary for the officer to digitally sign the relevant information using a digital certificate acceptable to APRA.
Minor alterations to forms and instructions
APRA may make minor variations to the instructions to a form, to clarify their application to the form without changing any substantive requirement in the form or instructions.
If APRA makes such a variation it must notify in writing each ADI that is required to report under this Reporting Standard.
Interpretation
In this Reporting Standard:
AASB has the meaning in section 9 of the Corporations Act 2001.
ADI means an authorised deposit-taking institution within the meaning of the Banking Act 1959.
APRA means the Australian Prudential Regulation Authority established under the Australian Prudential Regulation Authority Act 1998.
Australian-owned bank means a locally incorporated ADI that assumes or uses the word ‘bank’ in relation to its banking business and is not a foreign subsidiary bank.
building society means a locally incorporated ADI that assumes or uses the expression ‘building society’ in relation to its banking business.
business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays.
class of ADI means each of the following:
(i)Australian-owned bank;
(ii)foreign subsidiary bank
(iii)branch of a foreign bank;
(iv)building society;
(v)credit union; and
(vi)provider of purchased payment facilities.
credit union means a locally incorporated ADI that assumes or uses the expression ‘credit union’ in relation to its banking business and, for the purposes of paragraph 9 of this Reporting Standard, includes Cairns Penny Savings and Loans Limited.
due date means the relevant due date under paragraph 9 or, if applicable, paragraph 10.
foreign ADI has the meaning given in section 5 of the Banking Act 1959.
foreign subsidiary bank means a locally incorporated ADI in which a bank that is not locally incorporated has a stake of more than 15 per cent.
locally incorporated means incorporated in Australia or in a State or Territory of Australia, by or under a Commonwealth, State or territory law.
other ADI means an ADI that is not an Australian-owned bank, a branch of a foreign bank, a building society, a credit union, a foreign subsidiary bank, or a provider of purchased payment facilities, but for the purposes of paragraph 9 of this Reporting Standard, does not include Cairns Penny Savings and Loans Limited.
provider of purchased payment facilities means an ADI that is subject to a condition on its authority under section 9 of the Banking Act 1959 confining the banking business that the ADI is authorised to carry on to providing purchased payment facilities.
reporting period means a period mentioned in paragraph 7 or, if applicable, paragraph 8.
stake means a stake determined under the Financial Sector (Shareholdings) Act 1998, as if the only associates that were taken into account under paragraph (b) of subclause 10(1) of the Schedule to that Act were those set out in paragraphs (h), (j) and (l) of subclause 4(1).
Unless the contrary intention appears, a reference to an Act, Prudential Standard, Reporting Standard, Australian Accounting or Auditing Standard is a reference to the instrument as in force from time to time.
Reporting Form ARF 320.8
Housing Loan Reconciliation
Instruction Guide
This instruction guide is designed to assist in the completion of Reporting Form ARF 320.8 Housing Loan Reconciliation. The purpose of this form is to provide quarterly statistics on housing lending activities, including the flow of credit and composition of loans by type.
General directions and notes
Reporting entity
The form is to be completed on a domestic books basis by all Australian-owned banks, foreign subsidiary banks, credit unions, building societies, and branches of foreign banks with total housing loan assets greater than $1 billion.
The domestic books of a reporting entity relate to the Australian books of the reporting entity and have the following scope:
is an unconsolidated report of the ADI’s operations/transactions that are booked inside Australia;
exclude offshore branches of the Australian licensed ADI from this reporting unit;
exclude offshore banking units based overseas from this reporting unit;
do not consolidate Australian and offshore controlled entities or associated entities that are not ADIs;
include Australian-based offshore banking units of the licensed ADI; and
exclude transactions with non-residents recorded on Australian books.
Reporting period
The information provided in this form should be for the three calendar months up to and including the last day of the stated quarter (i.e. September, December, March and June). Australian-owned banks, foreign subsidiary banks and branches of foreign banks are required to submit the completed form to APRA within 20 business days of the end of the relevant reporting quarter. Credit unions and building societies are required to submit the completed form to APRA within 15 business days of the end of the relevant reporting quarter.
Unit of measurement
Banks are asked to complete the form in thousands of Australian dollars (AUD). All other reporting entities are asked to complete the form in whole dollars with no decimal place.
Amounts denominated in foreign currency are to be converted to AUD in accordance with AASB 121 The Effects of Changes in Foreign Exchange Rates (AASB 121).
The general requirements of AASB 121 for translation are:
foreign currency monetary items outstanding at the reporting date must be translated at the spot rate at the reporting date. Items outstanding at the previous reporting date (opening balance) should be reported at the spot rate prevailing at the previous reporting date;[1]
[1]Monetary items are defined to mean units of currency held and assets and liabilities to be received or paid in a fixed or determinable number of units of currency. Spot rate means the exchange rate for immediate delivery.
foreign currency non-monetary items that are measured at historical cost in a foreign currency must be translated using the exchange rate at the date of the transaction;[2]
[2] Examples of non-monetary items include amounts prepaid for goods and services (e.g. prepaid rent); goodwill; intangible assets; physical assets; and provisions that are to be settled by the delivery of a non-monetary asset.
foreign currency non-monetary items that are measured at fair value will be translated at the exchange rate at the date when fair value was determined.
Transactions arising under foreign currency derivative contracts at the reporting date must be prepared in accordance with AASB 139 Financial Instruments: Recognition and Measurement (AASB 139). However, those foreign currency derivatives that are not within the scope of AASB 139 (e.g. some foreign currency derivatives that are embedded in other contracts) remain within the scope of AASB 121.
For APRA purposes equity items must be translated using the foreign currency exchange rate at the date of investment or acquisition. Post-acquisition changes in equity are required to be translated on the date of the movement.
As foreign currency derivatives are measured at fair value, the currency derivative contracts are translated at the spot rate at the reporting date.
Exchange differences should be recognised in profit and loss in the period which they arise. For foreign currency derivatives, the exchange differences would be recognised immediately in profit and loss if the hedging instrument is a fair value hedge. For derivatives used in a cash flow hedge, the exchange differences should be recognised directly in equity.
The ineffective portion of the exchange differences in all hedges would be recognised in profit and loss; and
translation of financial reports of foreign operations.
A foreign operation is defined in AASB 121 as meaning an entity that is a subsidiary, associate, joint venture or branch of a reporting entity, the activities of which are based or conducted in a country or currency other than those of the reporting entity.
Exchange differences relating to foreign currency monetary items that form part of the net investment of an entity in a foreign operation, must be recognised as a separate component of equity.
Translation of financial reports should otherwise follow the requirements in AASB 121.
Valuation adjustments arising from exchange rate fluctuations should be recorded in the ‘other’ column.
Basis of preparation
Unless otherwise specifically stated, information reported on this form should comply with Australian accounting standards.
Sector definitions
The definition of households is as per the instruction guide for Reporting Form ARF 320.0 Statement of Financial Position (Domestic Books) (ARF 320.0):
Households comprise individuals, or groups of individuals, whose dealings with other sectors are for personal or household purposes.
Exclude:
Sole proprietors, partnerships, family trusts, and other unincorporated enterprises owned by households.
Specific instructions
The aim of this form is to reconcile changes in the outstanding balance of housing term loans over the quarter. It does this by beginning with the previous quarter’s closing balance for loans, and then accounting for the movement over the quarter by identifying the components due to new drawdowns, interest, repayments and other adjustments.
Owner-occupied loans are mortgage loans secured against property occupied by the borrower.
Investment loans consist of the value of secured and unsecured housing loans to households for the construction or purchase of an investment property (for non-owner occupation). They include loans secured against non owner-occupied properties.
Any changes between owner-occupied and investment loans should be reflected under their correct category as at the end of the quarter.
Loans secured against a property but not used for property purchase purposes (i.e. personal loans) are not to be reported on this form.
Exclude loans that have been securitised or written off.
Previous closing balance
This figure should match with the closing balance in previous submissions, and be equal to total housing loans minus revolving housing credit as recorded in ARF 320.0 or Reporting Form ARF 323.0 Statement of Financial Position (Licensed ADI) (ARF 323.0) at the end of the previous quarter. The balance should be reported gross of provisions.
Drawdowns (new loans and redraws)
Report all loan amounts drawn down during the quarter and any increases (top-up amounts) on existing loans. This represents the gross increase in credit associated with newly originated loans as well as redraws on existing fixed-term loans.
Interest charged
Report the interest charged by the lender on outstanding loan balances during the current period, whether or not it is actually received from the borrower. This amount would be recognised as interest income in the reporting institution’s income and profit and loss accounts.
Scheduled repayments
Report the total (interest plus principal) value of repayments due during the period in accordance with the loan conditions, whether or not the repayments were actually received from the borrower. This is the contracted or agreed repayment amount.
Excess repayments due to sale of property or refinancing
Report the total value of loans, net of scheduled repayments, that are repaid in full during the period as a result of the borrower either selling the property or refinancing the loan (internally or externally).
Other excess repayments[3]
[3] Excess repayments and repayment deficiencies will generally both have non-zero entries as they are calculated at the individual loan level.
Report the sum of the amount by which actual repayments exceeded scheduled repayments, for each loan for which actual repayments exceeded scheduled repayments over the quarter. Exclude loans that were paid out due to refinancing or sale of the property, and loans for which scheduled repayments equalled or exceeded actual repayments. Payment deficiencies are recorded in the next column.
Repayment deficiencies[4]
[4] Refer to footnote 3.
Report the sum of the amounts by which scheduled interest payments and loan repayments exceeded actual repayments for each loan that was in payment deficiency at the end of the quarter. Exclude loans that did not record a payment deficiency.
Net write-offs
Report the value of loans written-off during the period less the amount recovered from any previously written-off loans that were subsequently recovered during the period.
Other adjustments
Report any other adjustments to the outstanding loan balance not previously reported. The adjustment must be entered as a positive or negative as appropriate. This could include changes due to loan sales or adjustments due to the securitisation of loans, exchange rate valuation adjustments for foreign-currency-denominated loans, fees associated with the loan that are not paid by the borrower and which are instead capitalised against the loan balance during the current period, and changes in the purpose of the loan, etc.
Closing balance
Report the value of outstanding loans at the end of the quarter. This total should be equal to the sum across the previous columns, and be equal to total housing loans minus revolving housing credit as recorded in ARF 320.0 or ARF 323.0.
Available redraw balance
Report the total value of accumulated excess (advance) repayments as at the end of the quarter that are accessible to households at a later date. This item represents the maximum amount that could be drawn down without bringing the balance of the loan account above that specified in the loan schedule.
Gross closing balance of loans with offset facilities
Report the gross outstanding balance of all loans with an offset account attached to them. An offset account is typically a deposit account in which the balance is either wholly or partly offset against the loan balance for the purposes of calculating interest. Where the account is an all-in-one facility (that is, where the loan and deposits are effectively combined in a single account) and it is not possible to separate the loan balance from the borrower’s deposits, report the net balance for those accounts.
Closing balance of offset facilities
Report the gross balance in all deposit accounts that are offset against the balance of an outstanding loan when calculating the interest owing. Where the account is an all-in-one facility and it is not possible to separate the loan balance from the borrower’s deposits, report zero for those accounts.
Gross closing balance of interest-only mortgages
Report the gross balance of all interest-only residential mortgage loans.
Gross closing balance of reverse mortgages
Report the gross balance (including principal and accrued unpaid interest) of all reverse mortgages and similar loan products. These are generally loans where the loan is repayable when the borrower is deceased or no longer lives in the property.
Note: the form relates only to fixed-term housing loans that have regular repayment schedules. However, reverse mortgages and similar loan products should be included regardless of whether they have a fixed term.
Gross closing balance of low-documentation loans
Report the gross balance of all loans where the lender has not, prior to loan approval, documented, assessed and verified the ability of the borrower to meet the repayment obligations (see APS 112 Capital Adequacy: Standardised Approach to Credit Risk (APS 112), Attachment D).
Gross closing balance of other non-standard loans
Include all other loans not meeting the definition of a standard loan in APS 112 Attachment D paragraph 6.
Number of loans
Report the number of individual residential mortgages outstanding as at the end of the quarter. Exclude loans that have been securitised or written off.
Number with offset facilities
Report the number of individual residential mortgages outstanding as at the end of the quarter with an offset facility attached to them. Exclude loans that have been securitised or written off.
Number with redraw facilities
Report the number of individual residential mortgages outstanding as at the end of the quarter with a redraw facility attached to them. Exclude loans that have been securitised or written off.
Number of interest-only mortgages
Report the number of individual interest-only residential mortgages outstanding as at the end of the quarter. Exclude loans that have been securitised or written off.
Number of reverse mortgages
Report the number of individual reverse mortgages outstanding as at the end of the quarter. Exclude loans that have been securitised or written off.
Note: the form relates only to fixed-term housing loans that have regular repayment schedules. However, reverse mortgages and similar loan products should be included regardless of whether they have a fixed term.
Number of low-documentation loans
Report the number of individual low-documentation mortgages outstanding as at the end of the quarter. Exclude loans that have been securitised or written off.
Number of other non-standard loans
Report the number of other individual non-standard loans outstanding as at the end of the quarter. Exclude loans that have been securitised or written off.
Total principal amount approved
Report the total value of residential mortgages approved, whether or not the funds have been advanced to the borrower, during the quarter.
Low-documentation loans approved
Report the total value of low-documentation loans approved during the quarter.
Interest-only loans approved
Report the total value of interest-only loans approved during the quarter.
Other non-standard loans approved
Report the total value of non-standard loans approved. Non-standard loans include reverse mortgages and low-documentation loans.
Third-party originated loans approved
Report the total value of broker-originated mortgages and other third-party originated loans approved during the quarter.
Loans approved outside serviceability policy
Report the total value of loans approved as an exception to your institution’s serviceability policy, either by overriding a minimum requirement or any other mechanism that advances credit below the policy minimum.
Loans approved LVR>60%
In accordance with Attachment C of Prudential Standard APS 112 Capital Adequacy: Standardised Approach to Credit Risk, determine the ratio of the outstanding amount of the loan to the value of the residential property or properties that secure the exposure (loan-to-valuation ratio, LVR).
Report the total value of loans approved with an LVR greater than or equal to 60 per cent but less than 80 per cent during the quarter.
Loans approved LVR>80%
Report the total value of loans approved with an LVR greater than or equal to 80 per cent but less than 90 per cent during the quarter.
Loans approved LVR>90%
Report the total value of loans approved with an LVR greater than or equal to 90 per cent during the quarter.
0
0
0