Explanatory Statement
Select Legislative Instrument No. 223
Australian Prudential Regulatory Authority Act 1998
Australian Prudential Regulation Authority Regulations 2011 (No. 1)
Section 60 of the Australian Prudential Regulation Authority Act 1998 (the Act) provides that the Governor-General may make regulations prescribing matters which are required or permitted by the Act to be prescribed, or which are necessary or convenient to be prescribed in order to carry out or give effect to the Act.
Subsection 56(5)(a) of the Act allows APRA to disclose protected information in the course of its prudential supervision to a financial sector supervisory agency or a prescribed agency (including foreign agencies) specified in the Australian Prudential Regulation Authority Regulations 1998 (the Regulations). Protected information is information which APRA has obtained in relation to a prudential regulation framework law, relating to a financial sector entity, a related body corporate or a customer of certain classes of financial institution.
The Trans-Tasman Council on Banking Supervision (TTBC), which comprises APRA, the Reserve Bank of Australia (RBA), the Australian Treasury, the Australian Securities and Investments Commission (ASIC), the New Zealand Treasury and the Reserve Bank of New Zealand (RBNZ), was formed to enhance co-operation on the supervision and information sharing of deposit-taking institutions which have a substantial presence in both jurisdictions.
APRA can currently disclose protected information to all TTBC members under subsection 56(5)(a) of the Act and Regulation 5 of the Regulations, except for the New Zealand Treasury. In order to share protected information with New Zealand Treasury, APRA currently needs to make an instrument under subsection 56(5)(b) of the Act. The ability of APRA to share information efficiently with all TTBC members is important in diagnosing distress in a trans-Tasman institution and coordinating a response.
The proposed Regulations would improve the efficiency of information-sharing within the TTBC by prescribing New Zealand Treasury for the purposes of subsection 56(5)(a) of the Act. This would remove the additional requirement and harmonise APRA’s powers to share information with other TTBC members. Details of the Regulations are set out in Attachment A.
Treasury considers that consultation on the proposed Regulations was not necessary, as the proposed Regulations are of a minor or machinery nature. They do not alter the substance of APRA’s powers to disclose protection information to New Zealand Treasury, but rather the mechanism by which that information is shared. The Office of Best Practice Regulation has agreed with this assessment and so a Regulation Impact Statement has not been required.
Nevertheless, Treasury has undertaken targeted discussions on the proposed regulation with relevant stakeholders. Treasury consulted with the Australian Bankers’ Association, the industry group which represents all trans-Tasman deposit-taking institutions, in September 2011. No concerns were raised. Treasury has also consulted with APRA, the RBA, ASIC, New Zealand Treasury and the RBNZ over the course of 2010 in formulating the proposal. No concerns were raised.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commence on the day after they are registered.
Attachment A
Details of Australian Prudential Authority Amendment Regulations 2011 (No. 1)
Regulation 1 specifies the name of the Regulations as the Australian Prudential Regulation Authority Amendment Regulations 2011 (No. 1).
Regulation 2 provides that the Regulations commence on the day after they are registered.
Regulation 3 provides that Schedule 1 amends the Australian Prudential Regulation Authority Regulations 1998.
Schedule 1 - Amendments
Items 1 and 2 insert New Zealand Treasury into the list of prescribed agencies at Regulation 5 of the current Regulations. This will allow APRA to share information with New Zealand Treasury under subsection 56(5)(a) of the Act, rather than under 56(5)(b) of the Act.
Overview
The Australian Prudential Regulation Authority Amendment Regulations 2011 (No. 1) were enacted to enhance the efficiency of information sharing within the Trans-Tasman Council on Banking Supervision (TTBC). This council, comprising APRA, the Reserve Bank of Australia (RBA), the Australian Treasury, the Australian Securities and Investments Commission (ASIC), the New Zealand Treasury, and the Reserve Bank of New Zealand (RBNZ), was established to improve the supervision and information exchange of deposit-taking institutions with a significant presence in both Australia and New Zealand. The regulations aim to address a gap in the current framework by allowing APRA to share protected information with the New Zealand Treasury directly under subsection 56(5)(a) of the Australian Prudential Regulation Authority Act 1998, rather than requiring a separate instrument under subsection 56(5)(b). This change is intended to streamline the process and harmonise APRA's information-sharing powers with other TTBC members, facilitating more effective coordination in responding to financial distress in trans-Tasman institutions. The Australian Government, through Treasury, deemed the consultation on these regulations unnecessary due to their minor nature and the absence of substantive changes to APRA's existing powers.
Scope and Application
The Australian Prudential Regulation Authority Regulations 2011 (No. 1) amend the Australian Prudential Regulation Authority Regulations 1998 to enhance the efficiency of information sharing within the Trans-Tasman Council on Banking Supervision (TTBC). The TTBC, which includes regulatory bodies from both Australia and New Zealand, was established to improve the supervision and information sharing of deposit-taking institutions with a significant presence in both countries. The Regulations aim to align the Australian Prudential Regulation Authority's (APRA) information-sharing powers with those of other TTBC members by allowing APRA to disclose protected information to the New Zealand Treasury under subsection 56(5)(a) of the Australian Prudential Regulation Authority Act 1998, rather than under subsection 56(5)(b). This change removes the need for APRA to make a separate instrument for sharing information with the New Zealand Treasury, thereby streamlining the process and facilitating timely and effective cooperation between the TTBC members. The Regulations apply to APRA and the specified TTBC members, with no exclusions or exemptions noted beyond the prescribed agencies outlined in the amended regulations.
Key Provisions
The main operative sections of the Australian Prudential Regulation Authority Amendment Regulations 2011 (No. 1) amend the Australian Prudential Regulation Authority Regulations 1998 (Regulations) to allow the Australian Prudential Regulation Authority (APRA) to disclose protected information to the New Zealand Treasury under subsection 56(5)(a) of the Australian Prudential Regulation Authority Act 1998 (Act), rather than under subsection 56(5)(b) of the Act. These amendments are specified in Schedule 1, Items 1 and 2 of the Regulations, which insert the New Zealand Treasury into the list of prescribed agencies at Regulation 5 of the current Regulations. These changes aim to streamline the information-sharing process between APRA and the Trans-Tasman Council on Banking Supervision (TTBC) members, including New Zealand Treasury, to improve the efficiency of diagnosing distress in trans-Tasman institutions and coordinating responses.
The Regulations impose obligations on APRA to ensure that the disclosure of protected information is done in accordance with the amended provisions. APRA must now comply with subsection 56(5)(a) of the Act when sharing protected information with the New Zealand Treasury, aligning its information-sharing powers with those for other TTBC members. This amendment removes the additional requirement of making an instrument under subsection 56(5)(b) of the Act for sharing information with the New Zealand Treasury, thus harmonising APRA’s powers across the TTBC. The Regulations also ensure that APRA’s actions remain within the legal framework provided by the Act and the Regulations.
There are no specific offences or penalties outlined in the Regulations themselves for breaches of the amended provisions. However, any breach of the Act or the Regulations by APRA, including improper disclosure of protected information, could result in civil or criminal consequences. Under the Act, unauthorised disclosures of protected information may lead to enforcement actions by APRA or other relevant authorities, including fines and other penalties as stipulated in the Act. The specific penalties would depend on the nature and severity of the breach, but they could include substantial financial penalties and potential criminal charges for individuals involved in unauthorised disclosures.
In summary, the Australian Prudential Regulation Authority Amendment Regulations 2011 (No. 1) aim to enhance the efficiency of information sharing between APRA and TTBC members by amending the Regulations to allow APRA to disclose protected information to the New Zealand Treasury under the same provisions as for other TTBC members. This change imposes a clear obligation on APRA to ensure compliance with the amended provisions and removes the need for additional instruments for information sharing with the New Zealand Treasury. While the Regulations themselves do not specify penalties for breaches, any unauthorised disclosures of protected information could lead to significant civil or criminal consequences under the Act.