Financial Sector (Collection of Data) exemption No. 1 of 2010

Administered by Department of the Treasury

Legislation au F2010L00537 Not in force Legislative Instrument

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Financial Sector (Collection of Data) exemption No. 1 of 2010

EXPLANATORY STATEMENT

Prepared by the Australian Prudential Regulation Authority (APRA)

Financial Sector (Collection of Data) Act 2001 (the Act), subsection 16(1)

Under subsection 16(1) of the Act, APRA may, by legislative instrument, exempt a financial sector entity from the requirement to comply with all the requirements or specified requirements contained in applicable reporting standards.

Australian Family Assurance limited  ABN 78 003 044 862 (AustFam) is a “financial sector entity” as defined by subsection 5(2) of the Act.  Financial Sector (Collection of Data) exemption No. 1 of 2010 (the instrument) exempts AustFam from the requirements contained in the reporting standards relating to quarterly returns specified in the Schedule.

 

1.      Background

AustFam is a local general insurer authorised to carry on insurance business in Australia under subsection 12(1) of the Insurance Act 1973.  AustFam is listed as being in run-off and is restricted by APRA from writing new or renewal insurance business. A notice varying the conditions on Authorisation to carry on insurance business states that from 24 June 2002, AustFam may only conduct insurance business in Australia for the sole purpose of discharging liabilities that arose under policies entered prior to that date.

 

Prior to entering into runoff, AustFam entered into an assignment of liability with Trans Pacific Insurance Corporation (TPIC), a Caymans Island class B insurer sometime in 2001.  A class B insurance licence allows the insurer to write insurance outside of the Cayman Islands. 

 

The assignment of liabilities was without novation.  TPIC assumed the liabilities and paid out claims from the date of assignment in 2001 until 23 April 2009 when TPIC entered into liquidation.

 

Upon TPIC entering into liquidation, liability for the remaining outstanding claims in relation to this assigned business fell back upon AustFam.  Consequently, approximately $2.5 million in liabilities were re-introduced to AustFam’s balance sheet, backed by assets of only $695,000.

 

 

On 3 July 2009, the Federal Court appointed Murray Smith of McGrathNicol as judicial manager of AustFam pursuant to section 62K of the Insurance Act 1973 on grounds of unsatisfactory financial position.

 

The judicial manager’s assessment of AustFam’s assets and liabilities was that AustFam only had approximately $400,000 in assets, with liabilities estimated to be $2.5 million.

 

On 15 October 2009 the Minister made a declaration under section 62ZZC of the Insurance Act 1973 that Division 3 of Part VC of the Insurance Act 1973 applies to AustFam.  This allowed for the Financial Claim Scheme to be used to settle all remaining claims.

 

On 30 October 2009 on application of the judicial manager, the Federal Court appointed Murray Smith of McGrathNicol as liquidator to AustFam.

 

With AustFam now in liquidation and remaining outstanding claims being settled with the assistance of the Financial Claims Scheme, the outstanding claims reserves are at a level that is considered to be immaterial to APRA in terms of supervision and data publication purposes.

 

2.      Purpose of the instrument

The purpose of the instrument is to exempt AustFam from all of the requirements relating to quarterly and annual reporting in the following reporting standards:

  • GRS 110.0 (2008) Minimum Capital Requirement
  • GRS 120.0 (2008) Determination of Capital Base
  • GRS 130.0 (2008) Off Balance Sheet Business - Credit Substitutes Provided and Risk Charge
  • GRS 130.1 (2008) Off Balance Sheet Business - Liquidity Support Facilities Obtained
  • GRS 130.2 (2008) Off Balance Sheet Business - Charges Granted and Risk Charge
  • GRS 130.3 (2008) Off Balance Sheet Business - Credit Support Received
  • GRS 140.0 (2008) Investments - Direct Interest Rate Holdings and Risk Charge
  • GRS 140.1 (2008) Investments - Direct Equity Holdings and Risk Charge
  • GRS 140.2 (2008) Investments - Direct Property Holdings and Risk Charge
  • GRS 140.3 (2008) Investments - Loans and Advances and Risk Charge
  • GRS 140.4 (2008) Investments - Indirectly Held by Insurer and Risk Charge
  • GRS 150.0 (2008) Asset Exposure Concentrations and Risk Charge
  • GRS 160.0 (2008) Derivative Activity and Risk Charge
  • GRS 170.0 (2008) Concentration Risk Charge
  • GRS 170.1 (2008) Maximum Event Retention and Risk Charge for Lenders Mortgage Insurers
  • GRS 210.0 (2008) Outstanding Claims Provision - Insurance Risk Charge
  • GRS 210.1 (2008) Premium Liabilities - Insurance Risk Charge
  • GRS 300.0 (2008) Statement of Financial Position
  • GRS 301.0 (2008) Reinsurance Assets and Risk Charge
  • GRS 310.0 (2008) Statement of Financial Performance
  • GRS 310.1 (2008) Premium Revenue and Reinsurance Expense
  • GRS 310.2 (2008) Claims Expense and Reinsurance Recoveries
  • GRS 310.3 (2008) Investment and Operating Income and Expense
  • GRS 320.0 (2008) Reconciliation of Annual Disclosure
  • GRS 400.0 (2008) Statement of Risk by Country
  • GRS 410.0 (2008) Movement in Outstanding Claims Provision
  • GRS 420.0 (2008) Premium Revenue by State and Territory of Australia
  • GRS 430.0 (2008) Claims Expense by State and Territory of Australia
  • GRS 440.0 (2008) Claims Development Tables

 

3.      Consultation

APRA has been in consultation with AustFam in relation to this issue.

 

Overview

The Financial Sector (Collection of Data) exemption No. 1 of 2010 is an instrument enacted under the Financial Sector (Collection of Data) Act 2001 by the Australian Prudential Regulation Authority (APRA). The purpose of this exemption is to relieve Australian Family Assurance Limited (AustFam) from the burden of complying with specified reporting requirements. AustFam, which is in the process of liquidation, previously had liabilities amounting to approximately $2.5 million re-introduced to its balance sheet. The exemption addresses the problem of the immateriality of these liabilities to APRA in terms of supervision and data publication purposes, thereby streamlining the regulatory process during this transitional phase. This instrument was developed following consultations with AustFam, recognising the unique circumstances of the insurer being in liquidation and the settled nature of its remaining outstanding claims through the Financial Claims Scheme. By exempting AustFam from the detailed quarterly and annual reporting requirements, APRA aims to reduce unnecessary administrative burdens while ensuring that the core regulatory objectives are still met.

Scope and Application

The Financial Sector (Collection of Data) exemption No. 1 of 2010 applies specifically to Australian Family Assurance Limited (AustFam), a financial sector entity as defined under the Financial Sector (Collection of Data) Act 2001. This instrument exempts AustFam from the requirements of complying with various reporting standards related to quarterly and annual reporting, as detailed in the instrument. The exemption is grounded in the fact that AustFam is currently in liquidation, with its remaining liabilities being settled through the Financial Claims Scheme, rendering the data collection requirements immaterial for regulatory and supervisory purposes. This exemption extends to the full scope of reporting standards listed in the Schedule, covering aspects such as capital requirements, off-balance-sheet business, investments, derivative activity, and claims provisions. The instrument’s geographic reach is confined to Australia, impacting only entities operating within the Australian financial sector. There are no stated exclusions, exemptions, or thresholds within the instrument itself, although the scope of applicability may be further defined through any subordinate instruments issued by APRA.

Key Provisions

The Financial Sector (Collection of Data) exemption No. 1 of 2010 (the instrument) operates under subsection 16(1) of the Financial Sector (Collection of Data) Act 2001 (the Act) to exempt Australian Family Assurance Limited (AustFam) from specific reporting requirements. Under this exemption, AustFam is relieved from the obligations of complying with various reporting standards detailed in the Schedule, such as those relating to minimum capital requirements, capital base determination, off-balance sheet business, investments, asset exposure, derivative activities, and financial position statements, among others. This exemption is particularly relevant to AustFam, which has been in a run-off status since 24 June 2002, and is now in liquidation following a judicial manager and liquidator appointment by the Federal Court. The obligations imposed by the Act on AustFam primarily concern the maintenance of certain financial records and the provision of data to the Australian Prudential Regulation Authority (APRA). However, the instrument exempts AustFam from the need to adhere to the specific reporting standards listed in the Schedule. This exemption acknowledges AustFam's current operational status and the negligible impact of its remaining liabilities on APRA's supervisory and data publication purposes. As a result, AustFam is no longer required to prepare and submit the detailed financial reports that would typically be expected from an active financial sector entity. For breach of the provisions set out in the Act, including non-compliance with the exempted reporting standards, the Act provides for both civil and criminal penalties. Specifically, section 19 of the Act stipulates that any person who contravenes a provision of the Act may be subject to a civil penalty of up to $21,000 for a corporation and $4,200 for an individual. Additionally, under section 20 of the Act, a person who is found guilty of an offence against the Act may be subject to criminal penalties, including fines and imprisonment. The exact penalties can vary depending on the nature and severity of the breach, with potential maximum penalties extending to substantial fines and imprisonment terms as determined by the court.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.