Australian Prudential Regulation Authority instrument fixing charges No. 2 of 2013

Australian Prudential Regulation Authority instrument fixing charges

No. 2 of 2013

Charges to be paid by representative offices of foreign banks in Australia

EXPLANATORY STATEMENT

Prepared by the Australian Prudential Regulation Authority (APRA)

Australian Prudential Regulation Authority Act 1998, paragraphs 51(1)(a) and (b)

Acts Interpretation Act 1901, subsection 33(3)

This explanatory statement relates to instrument fixing charges No. 2 of 2013 which is made under paragraphs 51(1)(a) and 51(1)(b) of the Australian Prudential Regulation Authority Act 1998 (the APRA Act) and subsection 33(3) of the Acts Interpretation Act 1901, and dated 8 March 2013 (the Instrument).

The Instrument revokes Instrument Fixing Charges To Be Paid To APRA No 4 of 2010 dated 17 December 2010 (the revoked instrument) and fixes the charges set out in the Schedule to the Instrument, in respect of applications by foreign banks to APRA for consent to maintain a representative office in Australia under section 67 of the Banking Act 1959, and for services provided by APRA in undertaking the monitoring of such representative offices in Australia.

1. 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.

The Banking Act 1959 (the Banking Act) is a law of the Commonwealth.  Under subsection 67(1) of the Banking Act a person, other than an ADI, is guilty of an offence if:

(a)  the person carries on banking business in a foreign country but does not carry on banking business in Australia; and

(b)  the person establishes or maintains an office in Australia wholly or partly in connection with the carrying on of that banking business in that foreign country; and

 (c)  APRA did not consent, in writing, to the establishment or maintenance of that office; and

 (d)  there is no determination in force under section 11 that this subsection does not apply to the person.

Under subsection 67(2) APRA may, at any time, by notice in writing served on the person concerned:

(a)  impose conditions, or additional conditions, on consent;

(b)  vary or revoke conditions imposed on a consent; or

(c)  revoke a consent.

The reasons for imposing the charges and the basis for calculation of the charges is set out in the Explanatory Statement for the Instrument Fixing Charges to be paid to APRA – No. 2 of 2004 – Representative Offices of Foreign Banks[1].   

2.      Purpose of the Instrument

The Instrument sets out the charges fixed by APRA to be paid:

• by applicants for APRA’s consent under s67 of the Banking Act to establish or maintain representative offices of overseas banks in Australia; and

• for the costs or expenses incurred or to be incurred by APRA in relation to APRA’s monitoring of operations of such representative offices in Australia and the overseas banks’ compliance with the conditions imposed upon APRA’s consent under section 67. 

Table 1 Summary of the charges fixed by the Instrument.

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 revoked 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 are reasonably related to the costs incurred by APRA in processing applications under section 67 of the Banking Act to establish or maintain representative offices of overseas banks in Australia and in relation to APRA’s monitoring of the operations of such representative offices in Australia and the overseas banks’ compliance with the conditions imposed upon APRA’s consent under section 67.

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 representative offices of foreign banks in Australia fees were reviewed (along with other entity type charges) during the 2011-12 financial year to ascertain that all existing charges are set at appropriate levels and are compliant with the cost recovery guidelines.

This review included consultation with members of APRAs 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 representative offices of foreign banks in Australia and other charges 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; and
• There should be no discount applied to licensing re-application charges.”

5.      Regulatory Impact Statement

The Office of Best Practice Regulation has been consulted on the charges to be paid by representative offices of foreign banks in Australia 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 foreign banks for consent to maintain a representative office in Australia and for services provided by APRA in undertaking the monitoring of such representative offices in Australia.  Charges payable by foreign banks 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] The Explanatory Statement for the Instrument Fixing Charges to be paid to APRA – No. 2 of 2004 can be found on http://www.comlaw.gov.au/Details/F2006B01154/Download (FRLI reference number F2006B01154).