Financial Sector (Collection of Data) (reporting standard) determination No. 10 of 2016 - GRS 116.0 _G - Insurance Concentration Risk Charge (Level 2 Insurance Group)

Administered by Department of the Treasury

Legislation au F2016L01216 Not in force Legislative Instrument

Legislation content

Financial Sector (Collection of Data) determination Nos. 1 to 15 of 2016

EXPLANATORY STATEMENT

Prepared by the Australian Prudential Regulation Authority (APRA)

Financial Sector (Collection of Data) Act 2001(the Act), subsections 13(1) and 15(1)

Acts Interpretation Act 1901, subsection 33(3)

Under paragraph 13(1)(a) of the Act, APRA may, by writing, determine reporting standards with which financial sector entities must comply.  Such standards relate to reporting financial or accounting data and other information regarding the business or activities of the entities.  Subsection 15(1) of the Act provides that APRA may declare a day on and after which the reporting standards are to apply.

Subsection 33(3) of the Acts Interpretation Act 1901 provides that where an Act confers a power to issue an instrument 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 revoke any such instrument.

On 19 July 2016, APRA made the following determinations (the instruments):

  1. Financial Sector (Collection of Data) (reporting standard) determination No. 1 of 2016 which:

(i)                  revokes Reporting Standard GRS 001 Reporting Requirements made under Financial Sector (Collection of Data) (reporting standard) determination No. 1 of 2013; and

(ii)               determines Reporting Standard GRS 001 Reporting Requirements;

 

2.      Financial Sector (Collection of Data) (reporting standard) determination No. 2 of 2016 which:

(i)                  revokes Reporting Standard GRS 110.1_G Prescribed Capital Amount (Level 2 Insurance Group) made under Financial Sector (Collection of Data) (reporting standard) determination No. 27 of 2013; and

(ii)               determines Reporting Standard GRS 110.1_G Prescribed Capital Amount;

 

3.      Financial Sector (Collection of Data) (reporting standard) determination No. 3 of 2016 which:

(i)                  revokes Reporting Standard GRS 112.0_G Determination of Capital Base (Level 2 Insurance Group) made  under Financial Sector (Collection of Data) (reporting standard) determination No.28 of 2013; and

(ii)               determines Reporting Standard GRS 112.0_G Determination of Capital Base (Level 2 Insurance Group);

4.      Financial Sector (Collection of Data) (reporting standard) determination No. 4 of 2016 which:

(i)                  revokes Reporting Standard GRS 112.3_G Related Party Exposures (Level 2 Insurance Group) made under Financial Sector (Collection of Data) (reporting standard) determination No. 29 of 2013; and

(ii)               determines Reporting Standard GRS 112.3_G Related Party Exposures (Level 2 Insurance Group);

5.      Financial Sector (Collection of Data) (reporting standard) determination No. 5 of 2016 which:

(i)                    revokes Reporting Standard GRS 114.0_G Asset Risk Charge (Level 2 Insurance Group) made under Financial Sector (Collection of Data) (reporting standard) determination No. 30 of 2013; and

(ii)               determines Reporting Standard GRS 114.0_G Asset Risk Charge (Level 2 Insurance Group);

6.      Financial Sector (Collection of Data) (reporting standard) determination No. 6 of 2016 which:

(i)                  revokes Reporting Standard GRS 114.1_G Assets by Counterparty Grade (Level 2 Insurance Group) made under Financial Sector (Collection of Data) (reporting standard) determination No. 31 of 2013; and

(ii)                determines Reporting Standard GRS 114.1_G Assets by Counterparty Grade (Level 2 Insurance Group);

7.      Financial Sector (Collection of Data) (reporting standard) determination No. 7 of 2016 which

(i)                  revokes Reporting Standard GRS 114.3_G Off-balance Sheet Business (Level 2 Insurance Group) made under Financial Sector (Collection of Data) (reporting standard) determination No. 32 of 2013; and

(ii)                determines Reporting Standard GRS 114.3_G Off-balance Sheet Business (Level 2 Insurance Group);

8.      Financial Sector (Collection of Data) (reporting standard) determination No. 8 of 2016 which

(i)                  revokes Reporting Standard GRS 115.0_G Outstanding Claims Liabilities – Insurance Risk Charge (Level 2 Insurance Group) made under Financial Sector (Collection of Data) (reporting standard) determination No. 33 of 2013; and

(ii)                determines Reporting Standard GRS 115.0_G Outstanding Claims Liabilities – Insurance Risk Charge (Level 2 Insurance Group);

9.      Financial Sector (Collection of Data) (reporting standard) determination No. 9 of 2016 which:

(i)                  revokes Reporting Standard GRS 115.1_G Premiums Liabilities – Insurance Risk Charge (Level 2 Insurance Group) made under Financial Sector (Collection of Data) (reporting standard) determination No. 34 of 2013; and

(ii)                determines Reporting Standard GRS 115.1_G Premiums Liabilities – Insurance Risk Charge (Level 2 Insurance Group);

10.  Financial Sector (Collection of Data) (reporting standard) determination No. 10 of 2016 which:

(i)                  revokes Reporting Standard GRS 116.0_G Insurance Concentration Risk Charge (Level 2 Insurance Group) made under Financial Sector (Collection of Data) (reporting standard) determination No. 35 of 2013; and

(ii)                determines Reporting Standard GRS 116.0_G Insurance Concentration Risk Charge (Level 2 Insurance Group);

11.  Financial Sector (Collection of Data) (reporting standard) determination No. 11 of 2016 which:

(i)                  revokes Reporting Standard GRS 117.0_G Asset Concentration Risk Charge (Level 2 Insurance Group) made under Financial Sector (Collection of Data) (reporting standard) determination No. 36 of 2013; and

(ii)                determines Reporting Standard GRS 117.0_G Asset Concentration Risk Charge (Level 2 Insurance Group);

12.  Financial Sector (Collection of Data) (reporting standard) determination No. 12 of 2016 which:

(i)                  revokes Reporting Standard GRS 118.0_G Operational Risk Charge (Level 2 Insurance Group) made under Financial Sector (Collection of Data) (reporting standard) determination No. 37 of 2013; and

(ii)                determines Reporting Standard GRS 118.0_G Operational Risk Charge (Level 2 Insurance Group);

13.  Financial Sector (Collection of Data) (reporting standard) determination No. 13 of 2016 which:

(i)                  revokes Reporting Standard GRS 300.0_G Statement of Financial Position (Level 2 Insurance Group) made under Financial Sector (Collection of Data) (reporting standard) determination No. 38 of 2013; and

(ii)                determines Reporting Standard GRS 300.0_G Statement of Financial Position (Level 2 Insurance Group);

14.  Financial Sector (Collection of Data) (reporting standard) determination No. 14 of 2016 which:

(i)                  revokes Reporting Standard GRS 302.0_G Statement of Financial Position by Region (Level 2 Insurance Group) made under Financial Sector (Collection of Data) (reporting standard) determination No. 39 of 2013; and

(ii)                determines Reporting Standard GRS 302.0_G Statement of Financial Position by Region (Level 2 Insurance Group); and

15.  Financial Sector (Collection of Data) (reporting standard) determination No. 15 of 2016 which:

(i)                   revokes Reporting Standard GRS 310.0_G Income Statement (Level 2 Insurance Group) made under Financial Sector (Collection of Data) (reporting standard) determination No. 40 of 2013; and

(ii)                determines Reporting Standard GRS 310.0_G Income Statement (Level 2 Insurance Group).

 

The instrument commences on 30 June 2016 and applies to reporting periods ending on and after that date.  The instruments are being registered after this date; however, parent entities of Level 2 insurance groups will not be adversely impacted by this retrospective operation as APRA has removed the duplicate reporting requirement to reduce unnecessary reporting for the parent entities. No parent entity’s rights will be adversely affected, nor will any liabilities be imposed by these instruments, as the time for lodging forms with APRA for the parent entities of Level 2 insurance groups will arise no earlier than three months after the June reporting period.

 

  1. Background

Until now, Level 2 insurance groups have provided two unaudited semi-annual returns and an audited annual return each financial year. The second unaudited semi-annual return was due one month prior to the audited annual return, and was used by APRA supervisors to review capital position and financial performance prior to submission of the audited return.

The due dates for audited annual return submission was made one month earlier for reporting periods after 1 January 2015, making it due on the same day as the unaudited second semi-annual return.

Consistent with APRA’s commitment to look for opportunities to reduce compliance costs for business and the community, APRA has removed this duplicate reporting requirement to reduce unnecessary reporting for Level 2 insurance groups.

 

2.      Purpose and operation of the instrument

 

The purpose of the instrument is to remove the second semi-annual return for Level 2 insurance groups and reduce their reporting burden by amending the reporting standards.

 

3.      Consultation

 

In 2014, APRA undertook a project to identify opportunities for regulatory cost savings for industry. As part of the project, APRA undertook a structured consultation process with each APRA-regulated industry (via the relevant industry associations). Together, the membership of these industry associations represented all APRA-regulated industries. Submissions from industry bodies suggested that changes to the reporting framework could be made in areas where the frequency of reporting could be reduced.

 

In 2015, the duplicate reporting requirement represented by the unaudited Level 2 second semi-annual and audited Level 2 annual forms falling due on the same day was identified by industry participants and APRA as an opportunity for regulatory costs savings.

 

Removing the duplicate reporting and reducing the burden on industry is overall beneficial to industry and as it was resultant of earlier engagement with industry further consultation with industry was not considered necessary.

 

4.      Regulatory Impact Statement

 

APRA has consulted with the Office of Best Practice Regulation (OBPR) and the OBPR has confirmed that the changes implemented by the instrument are of a minor nature. The OBPR has confirmed that a Regulatory Impact Statement (RIS) is not required.  

 

5.      Statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

A Statement of Compatibility with Human Rights is Appendix A to this Explanatory Statement.

 

Appendix A

 

Statement of Compatibility with Human Rights

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Financial Sector (Collection of Data) (reporting standard) determinations No. 1 to 15 of 2016

 

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (HRPS Act).

 

Overview of the Legislative Instruments

 

These Legislative Instruments removes the requirement to report the second semi-annual return for Level 2 insurance groups in the following reporting standards:

 

  •   Reporting Standard GRS 110.1_G Prescribed Capital Amount  (Level 2 Insurance Group);
  •   Reporting Standard GRS 112.0_G Determination of Capital Base (Level 2 Insurance Group);
  •   Reporting Standard GRS 112.3_G Related Party Exposures (Level 2 Insurance Group);
  •   Reporting Standard GRS 114.0_G Asset Risk Charge (Level 2 Insurance Group);
  •   Reporting Standard GRS 114.1_G Assets by Counterparty Grade (Level 2 Insurance Group);
  •   Reporting Standard GRS 114.3_G Off-balance Sheet Business (Level 2 Insurance Group);
  •   Reporting Standard GRS 115.0_G Outstanding Claims Liabilities - Insurance Risk Charge (Level 2 Insurance Group);
  •   Reporting Standard GRS 115.1_G Premiums Liabilities - Insurance Risk Charge (Level 2 Insurance Group);
  •   Reporting Standard GRS 116.0_G Insurance Concentration Risk Charge (Level 2 Insurance Group);
  •   Reporting Standard GRS 117.0_G Asset Concentration Risk Charge (Level 2 Insurance Group);
  •   Reporting Standard GRS 118.0_G Operational Risk Charge (Level 2 Insurance Group);
  •   Reporting Standard GRS 300.0_G Statement of Financial Position (Level 2 Insurance Group);
  •   Reporting Standard GRS 302.0_G Statement of Financial Position by Region (Level 2 Insurance Group); and
  •   Reporting Standard GRS 310.0_G Income Statement (Level 2 Insurance Group).

 

 

Human rights implications

 

APRA has assessed the instruments and are of the view that it 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, the instruments are compatible with human rights.

 

Conclusion

 

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

Overview

The Financial Sector (Collection of Data) determination Nos. 1 to 15 of 2016, issued by the Australian Prudential Regulation Authority (APRA), aim to address the issue of unnecessary reporting burdens on financial sector entities, particularly Level 2 insurance groups. Enacted under the Financial Sector (Collection of Data) Act 2001, these determinations were designed to streamline and rationalise the reporting requirements for these entities, thereby reducing compliance costs and enhancing efficiency without compromising regulatory oversight. The determinations revoke certain previously established reporting standards and establish new ones to eliminate the redundancy of submitting both a second semi-annual and an annual audited return, which had coincided in their due dates, thereby doubling the reporting effort. This legislative action reflects APRA's ongoing commitment to reviewing and improving the regulatory framework to better serve the interests of both the financial sector and the broader community.

Scope and Application

The Financial Sector (Collection of Data) (reporting standard) determinations No. 1 to 15 of 2016, made by the Australian Prudential Regulation Authority (APRA) under the Financial Sector (Collection of Data) Act 2001, pertain specifically to financial sector entities, particularly Level 2 insurance groups within Australia. These determinations revoke existing reporting standards and introduce new ones to streamline the reporting requirements for these entities, thereby reducing the burden of duplicate reporting. The changes apply to reporting periods ending on and after 30 June 2016. The geographic reach of these determinations is confined to Australia, as APRA operates under the Commonwealth jurisdiction to regulate the financial sector within the country. The new standards aim to eliminate the second semi-annual return for Level 2 insurance groups, consolidating reporting requirements to improve efficiency and reduce unnecessary compliance costs for the industry. There are no stated exclusions or exemptions in these determinations, and they do not impose any new liabilities on the entities covered. APRA has ensured that the implementation of these determinations will not adversely affect the rights of parent entities of Level 2 insurance groups, as the new reporting deadlines provide sufficient time for compliance.

Key Provisions

The Financial Sector (Collection of Data) determination Nos. 1 to 15 of 2016, issued by the Australian Prudential Regulation Authority (APRA), primarily focus on revising the reporting standards for Level 2 insurance groups. These determinations (sections 1 to 15) revoke previous reporting standards and introduce new ones that pertain to financial and accounting data. This includes information on the business and activities of these entities. These changes were made under the authority provided by the Financial Sector (Collection of Data) Act 2001, specifically subsections 13(1) and 15(1), and are subject to the revocation power outlined in subsection 33(3) of the Acts Interpretation Act 1901. The Act imposes certain obligations on financial sector entities to comply with the newly determined reporting standards. These obligations include providing accurate and timely financial and accounting data, as well as other relevant information about their business activities. The new standards aim to streamline reporting processes by eliminating the need for duplicate submissions, thus reducing the overall reporting burden on Level 2 insurance groups. The instruments came into effect on 30 June 2016, applying to reporting periods ending on or after that date. APRA ensured that the retrospective operation of these instruments would not adversely affect the rights of parent entities of Level 2 insurance groups by providing sufficient notice for compliance. Failure to comply with the reporting standards set out in these determinations may result in various consequences. While the Explanatory Statement does not detail specific penalties, non-compliance with reporting requirements under the Financial Sector (Collection of Data) Act 2001 generally may lead to enforcement actions by APRA. These actions could include administrative penalties or other regulatory measures intended to ensure adherence to the prescribed reporting standards. Given the importance of accurate financial reporting in maintaining market stability and investor confidence, compliance with these standards is crucial for all entities governed by the Act.

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