Australian Prudential Regulation Authority instrument fixing charges
No.1 of 2013
For applications for authorisation or registration as an ADI, General Insurer or Life Company
EXPLANATORY STATEMENT
Prepared by the Australian Prudential Regulation Authority
Australian Prudential Regulation Authority Act 1998, paragraph 51(1) (b)
Acts Interpretation Act 1901, subsection 33(3)
This explanatory statement relates to Australian Prudential Regulation Authority instrument fixing charges No. 1 of 2013 made under paragraph 51(1)(b) of the Australian Prudential Regulation Authority Act 1998 (the APRA Act) and subsection 33(3) of the Acts Interpretation Act 1901[1] and dated 8 March 2013 (the Instrument).
The Instrument:
1. revokes the Instrument fixing charges to be paid to APRA No 1 of 2010 for applications for authorisation as an ADI, General Insurer or Life Company dated 17 December 2010 (the revoked instrument); and
2. fixes the charges set out in the Schedule to the Instrument, in respect of applications for authorisation or registration as an authorised deposit-taking institution (ADI) for the purposes of the Banking Act 1959 (the Banking Act), as a general insurer for the purposes of the Insurance Act 1973 (the Insurance Act), and as a life company (including a friendly society), for the purposes of the Life Insurance Act 1995 (the Life Act), respectively.
- Background
Legislative framework
The APRA Act is administered by APRA. APRA has statutory responsibility for the prudential regulation of most of the superannuation industry, the general insurance and life insurance industries and authorised deposit taking institutions (ADIs), which include banks, building societies and credit unions.
Subsection 51(1) of the APRA Act provides that APRA may, by legislative instrument, fix charges to be paid to it by persons in respect of:
(a) services and facilities which APRA provides to such persons; and
(b) applications or requests made to APRA under laws of the Commonwealth.
Subsection 51(1) also specifies that an instrument fixing charges may provide for the waiver or refund of the charges.
Subsection 51(2) of the APRA Act provides that a charge fixed under subsection 51(1) must be reasonably related to the costs and expenses incurred or to be incurred in relation to the matters to which the charge relates, and must not be such as to amount to taxation.
Subsection 33(3) of the Acts Interpretation Act 1901 provides that where an Act confers a power to make, grant or issue any instrument (including rules, regulations or by‑laws) the power shall, unless the contrary intention appears, be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.
APRA made the Instrument Fixing Charges to be paid to APRA for applications for authorisations as an ADI, General Insurer or Life Company dated 3 June 2003 (the original charging instrument).
The reasons for imposing the charges and the basis for calculation of the charges is set out in the combined Explanatory Statement and Regulatory Impact Statement for the original charging instrument[2].
2. Purpose of the Instrument
The Instrument sets out the charges fixed by APRA for applications for authorisation or registration as an ADI for the purposes of the Banking Act, as a general insurer for the purposes of the Insurance Act, and as a life company (including a friendly society), for the purposes of the Life Act, respectively.
The charges which are fixed are set out in the Schedule to the Instrument and are summarised below.
The Instrument also provides that the charges concerned are payable by the applicant when the application is lodged, are not refundable if the application is refused, withdrawn or not proceeded with, and may be waived or refunded by APRA in specified circumstances, (as permitted under subsection 51(1) of the APRA Act).
For the avoidance of doubt, it should be noted that the charge is payable in respect of every new application, even one that is made after the refusal or withdrawal of an earlier application for which the applicant also paid a charge. These provisions are also consistent with those contained in the revoked instrument.
Table 1 Summary of the charges fixed by the Instrument.
Entity type | Type of charge | Proposed charge |
ADIs |
|
|
Bank | Authorisation charge | $80,000 |
Building society or credit union | Authorisation charge | $80,000 |
Specialist credit card institution or provider of purchased payment facilities | Authorisation charge | $40,000 |
Other ADI under section 9 of the Banking Act not yet covered | Authorisation charge | $80,000 |
Other Entities |
|
|
General insurer | Authorisation charge | $80,000 |
Life company (other than a friendly society) | Registration charge | $80,000 |
Life company (being a friendly society) | Registration charge | $80,000 |
These charges are exempt from GST by operation of A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2010 (No. 2) made by the Assistant Treasurer on 7 June 2010 (the GST Determination) under section 81-5 of the A New Tax System (Goods and Services Tax) Act 1999.
Operation and commencement of the Instrument
The Instrument operates to repeal the original charging instrument and the variation instrument, and fix the charges set out in the Schedule to the Instrument. The Instrument commences on the date of registration on the Federal Register of Legislative Instruments.
Charges must be reasonably related to the costs and expenses incurred
The charges set by this instrument are fixed on a cost recovery basis and in line with the Australian Government Cost Recovery Guidelines July 2005. A Cost Recovery Impact Statement (CRIS) has been tabled in support of this Explanatory Statement.
How the charges have been calculated
The ADI, General Insurer or Life Company fees were reviewed (along with other entity type fees) during the 2011-12 financial year to ascertain whether all existing fees are set at appropriate levels and are compliant with the cost recovery guidelines.
This review included consultation with members of APRA's cross-division Licensing Group.
3. Consultation
Consultation has not been undertaken as the changes are considered to be of a minor or machinery nature and do not substantially alter existing arrangements within the meaning of paragraph 18(2)(a) of the Legislative Instruments Act 2003.
4. Cost Recovery Impact Statement
A Cost Recovery Impact Statement, executed by APRA’s Chairman and dated 7 March 2013 has been prepared which captures the proposed charges.
As indicated in the Cost Recovery Impact Statement:
“The outcome of the review relating to applications of entities, including ADIs, General Insurers and regulated Life Companies, intending to be authorised fees was:
- All licensing application charges should be charged at the same level, regardless of the industry type;
- All licensing application charges are to be increased to better reflect the actual cost incurred, with the exception of special service providers (SCCI and PPPFs); and
- There should be no discount applied to licensing re-application charges. “
5. Regulation Impact Statement
The Office of Best Practice Regulation has been consulted on the applications for authorisation or registration as an ADI, General Insurer or Life Company and has advised that a Regulation Impact Statement is not required as the proposed changes are of a ‘minor nature’.
6. Statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
APRA has assessed the Instrument against the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (HRPS Act) and determined that none of those instruments are of relevance to the Instrument.
The instrument will fix charges to be paid to APRA by corporations for applications for authorisation or registration as an ADI, General Insurer or Life Company. Authorisation permits the holder to carry on certain types of business in Australia, subject to prudential regulation by APRA. Charges payable by authorised corporations will not have any direct or indirect effect on the rights of individual persons.
Consequently, the Instrument does not engage any of the applicable rights or freedoms recognised or declared in the international instruments listed in section 3 of the HRPS Act. Accordingly, in APRA’s assessment, this legislative instrument is compatible with human rights.
[1] Subsection 33(3) of the Acts Interpretation Act 1901 confers a general power to repeal, rescind, revoke, amend or vary statutory instruments.
[2] The combined Explanatory Statement and Regulatory Impact Statement for the original charging instrument can be found on http://www.comlaw.gov.au/Details/F2006B01150/Download (FRLI reference number F2006B01150).