Australian Prudential Regulation Authority instrument fixing charges No. 3 of 2013

Australian Prudential Regulation Authority instrument fixing charges

No.3 of 2013

For applicants seeking authorisation or registration of a Non-Operating Holding Company (NOHC)

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. 3 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 revokes the Instrument fixing charges No. 5 of 2010 dated 17 December 2010 (the revoked instrument)[2] and fixes the charges set out in the Schedule to the Instrument, in respect of applications for:

• authorisation as a Non-Operating Holding Company (NOHC) of an ADI that is a bank or special service provider; or a building society or credit union; or a specialist credit card institution; or a general insurer; and
• registration as a NOHC of a life company (other than a friendly society) and a life company that is a friendly society.   

The Instrument also provides that the charges may be waived or refunded by APRA in specified circumstances and the fees are not refundable if the application is unsuccessful. 

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 reasons for imposing the charges and the basis for calculation of the charges is set out in the Explanatory Statement for Instrument Fixing Charges No. 4 of 2009[3].  .

2.      Purpose of the Instrument

The Instrument sets out charges in respect of applications made to APRA for applications for authorisation or registration of NOHCs under the Banking Act 1959 (the Banking Act), the Insurance Act 1973 (the Insurance Act) and the Life Insurance Act 1995 (the Life Act), collectively referred to as ‘the Acts’.   These charges are exempt of GST. 

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 unsuccessful or if APRA, in the course of processing the application, informs the applicant that the application will be unsuccessful 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 NOHC authorisation application 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 an authorisation application charge.

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 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 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 NOHC charges 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 changes.

As indicated in the Cost Recovery Impact Statement:

“The outcome of the review relating to (NOHC 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 for applicants seeking authorisation or registration of a Non-Operating Holding Company (NOHC) 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 a NOHC.  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] FRLI reference F2010L00134.

[3] The Explanatory Statement for the Instrument Fixing Charges No. 4 of 2009 can be found on http://www.comlaw.gov.au/Details/F2010L00134/Download (FRLI reference number F2010L00134).