Financial Sector (Collection of Data) (reporting standard) determination No. 14 of 2022

Administered by Department of the Treasury

Legislation au F2022L01348 In force Legislative Instrument

Legislation content

Financial Sector (Collection of Data) (reporting standard) determination Nos. 12 to 17 of 2022

EXPLANATORY STATEMENT

Prepared by the Australian Prudential Regulation Authority (APRA)

Financial Sector (Collection of Data) Act 2001, sections 13 and 15

Acts Interpretation Act 1901, section 33

Under subsection 13(1) of the Financial Sector (Collection of Data) Act 2001 (the Act), APRA has the power to determine reporting standards, in writing, 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 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.

Subsection 15(1) of the Act provides that APRA may declare a day on and after which the reporting standards are to apply.

On 12 October 2022, APRA made the following determinations (the instruments):

(1)          Financial Sector (Collection of Data) (reporting standard) determination No. 12 of 2022 which:

(i)            revokes Reporting Standard GRS 114.1 Assets by Counterparty Grade (GRS 114.1) made under Financial Sector (Collection of Data) (reporting standard) determination No. 6 of 2013; and

(ii)         determines a new version of GRS 114.1;

(2)          Financial Sector (Collection of Data) (reporting standard) determination No. 13 of 2022 which:

(i)            revokes Reporting Standard GRS 114.1_G Assets by Counterparty Grade (Level 2 Insurance Group) (GRS 114.1_G) made under Financial Sector (Collection of Data) (reporting standard) determination No. 6 of 2016; and

(ii)         determines a new version of GRS 114.1_G;

(3)          Financial Sector (Collection of Data) (reporting standard) determination No. 14 of 2022 which:

(i)            revokes Reporting Standard GRS 114.3 Off-balance Sheet Business (GRS 114.3) made under Financial Sector (Collection of Data) (reporting standard) determination No. 8 of 2013; and

(ii)         determines a new version of GRS 114.3;

(4)          Financial Sector (Collection of Data) (reporting standard) determination No. 15 of 2022 which:

(i)            revokes Reporting Standard GRS 114.3_G Off-balance Sheet Business (Level 2 Insurance Group) (GRS 114.3_G) made under Financial Sector (Collection of Data) (reporting standard) determination No. 7 of 2016; and

(ii)         determines a new version of GRS 114.3_G;

(5)          Financial Sector (Collection of Data) (reporting standard) determination No. 16 of 2022 which:

(i)            revokes Reporting Standard GRS 117.0 Asset Concentration Risk Charge (GRS 117.0) made under Financial Sector (Collection of Data) (reporting standard) determination No. 14 of 2013; and

(ii)         determines a new version of GRS 117.0;

(6)          Financial Sector (Collection of Data) (reporting standard) determination No. 17 of 2022 which:

(i)            revokes Reporting Standard GRS 117.0_G Asset Concentration Risk Charge (Level 2 Insurance Group) (GRS 117.0_G) made under Financial Sector (Collection of Data) (reporting standard) determination No. 11 of 2016; and

(ii)         determines a new version of GRS 117.0_G;

The instruments commence upon registration on the Federal Register of Legislation.

1. Background

On 12 October 2022, APRA determined six general insurance reporting standards incorporating consequential amendments to the reporting framework to support the operation of the Australian Government’s cyclone and related flood damage reinsurance pool. The amendments clarify that reinsurance provided by the Australian Reinsurance Pool Corporation (ARPC) are not subject to a capital charge in recognition of the Australian Government guarantee that supports the reinsurance pool.

The instruments amend the definition of an APRA-authorised reinsurer to include the ARPC. 

2. Purpose and operation of the instruments

The purpose of the instruments is to revoke the six existing reporting standards requiring consequential amendments and replace them with corresponding standards which incorporate appropriate amendments.

The determined reporting standards will ensure that APRA’s reporting framework aligns with its prudential framework, which recognises the ARPC as a high-grade APRA-authorised reinsurer and ensure that reinsurance recoverables from the ARPC are not subject to a capital charge in recognition of the Australian Government guarantee that supports the pool.

The reporting standards which have been revoked and replaced are:

  • Reporting Standard GRS 114.1 Assets by Counterparty Grade;
  • Reporting Standard GRS 114.1_G Assets by Counterparty Grade (Level 2 Insurance Group);
  • Reporting Standard GRS 114.3 Off-balance Sheet Business;
  • Reporting Standard GRS 114.3_G Off-balance Sheet Business (Level 2 Insurance Group);
  • Reporting Standard GRS 117.0 Asset Concentration Risk Charge; and
  • Reporting Standard GRS 117.0_G Asset Concentration Risk Charge (Level 2 Insurance Group).

The reporting standards require reporting for reporting periods that occurred prior to the commencement of the reporting standard. The reporting standards are not retrospective in operation as the obligation to report on these reporting periods commences from, and not prior to, the commencement of the reporting standard.

Where these standards refer to an Act, Regulation or Prudential Standard, this is a reference to the document as it exists from time to time, and which is available on the Federal Register of Legislation at www.legislation.gov.au.

There are a number of powers that may be exercised by APRA in reporting standards that involve an element of discretion and which may impact the interests of the general insurers to which the reporting standards apply. These decisions include APRA changing a reporting period or due date for an ADI to provide information required by each of the instruments or varying the reporting requirements in relation to a particular insurer or Level 2 Insurance Group. Decisions made by APRA exercising those powers are not subject to merits review. These discretions have not been amended and are consistent with discretions included in the reporting standards being revoked by the instruments.

APRA considers decisions made by APRA exercising discretions under its reporting standards should not be subject to merits review as they are financial decisions with a significant public interest element.

APRA’s reporting standards collect financial data from regulated entities. This data contains critical indicators of a regulated entity’s financial wellbeing, including capital adequacy. APRA relies heavily on this financial data to inform its supervisory actions towards its regulated entities. Without timely and complete data, APRA may miss indicators that a general insurer is taking on imprudent risk or is in distress. APRA’s supervisory decisions may be jeopardised if its receipt of data is unreliable due to entities seeking merits review under its reporting standards.

3. Consultation

On 16 June 2022, APRA undertook consultation by way of a letter to industry with all general insurers in relation to its proposed consequential amendments to the reporting framework to support the operation of the Australian Government’s cyclone and related flood damage reinsurance pool.

As part of the consultation, APRA requested written submissions by 30 June 2022 on its proposal to recognise the ARPC as a high-grade APRA-authorised reinsurance and its proposal that reinsurance recoverables from the ARPC are not subject to a capital charge in recognition of the Australian Government guarantee that supports the pool.

No submissions were received. APRA is satisfied the consultation was appropriate and reasonably practicable as the consequential amendments can be regarded as minor and machinery.

4. Regulation Impact Statement

The OBPR confirmed that a Regulation Impact Statement was not required for the changes described in this explanatory statement as they were considered minor and machinery.

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

A Statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 is provided at Attachment A to this Explanatory Statement.


ATTACHMENT 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) determination Nos. 12 to 17 of 2022

These Legislative Instruments are compatible with the human rights and freedoms recognised or declared in the international instrument listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (HRPS Act).

Overview of the Legislative Instruments

The purpose of the Legislative Instruments is to make consequential changes to Reporting Standard GRS 114.1 Assets by Counterparty Grade, Reporting Standard GRS 114.1_G Assets by Counterparty Grade (Level 2 Insurance Group), Reporting Standard GRS 114.3 Off-balance Sheet Business, Reporting Standard GRS 114.3_G Off-balance Sheet Business (Level 2 Insurance Group), Reporting Standard GRS 117.0 Asset Concentration Risk Charge, and Reporting Standard GRS 117.0_G Asset Concentration Risk Charge (Level 2 Insurance Group) to recognise the Australian Reinsurance Pool Corporation (ARPC) as a high-grade APRA-authorised reinsurer and to ensure that reinsurance recoverables from the ARPC are not subject to a capital charge in recognition of the Australian Government guarantee that supports the scheme.

Human rights implications

APRA has assessed the Legislative Instruments and is of the view that they do 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

These Legislative Instruments are compatible with human rights as they do not raise any human rights issues.

 

Overview

The Financial Sector (Collection of Data) (reporting standard) determination Nos. 12 to 17 of 2022 were enacted to amend and replace six existing reporting standards under the Financial Sector (Collection of Data) Act 2001. These determinations were made by the Australian Prudential Regulation Authority (APRA) on 12 October 2022 and aim to support the operation of the Australian Government’s cyclone and related flood damage reinsurance pool. The amendments clarify that reinsurance provided by the Australian Reinsurance Pool Corporation (ARPC) is not subject to a capital charge, recognising the Australian Government guarantee supporting the reinsurance pool. The new standards ensure that APRA’s reporting framework aligns with its prudential framework by recognising the ARPC as a high-grade APRA-authorised reinsurer. The purpose of these instruments is to revoke the existing standards and replace them with new ones that incorporate these necessary amendments. The instruments will take effect upon their registration on the Federal Register of Legislation.

Scope and Application

The Financial Sector (Collection of Data) (reporting standard) determination Nos. 12 to 17 of 2022, made by the Australian Prudential Regulation Authority (APRA) under the Financial Sector (Collection of Data) Act 2001, apply to entities within the Australian financial sector, specifically to those entities required to report financial or accounting data and other information regarding their business or activities. These determinations primarily affect general insurers, particularly in relation to their dealings with the Australian Reinsurance Pool Corporation (ARPC). The scope of these determinations includes the revocation of existing reporting standards and the establishment of new ones to reflect changes in the prudential framework, including the recognition of ARPC as a high-grade APRA-authorised reinsurer and the exemption of reinsurance recoverables from the ARPC from capital charges. These instruments, which came into effect upon their registration on the Federal Register of Legislation, do not extend beyond the Commonwealth jurisdiction and are not retrospective, only applying to reporting periods from their commencement date. While these determinations primarily target general insurers, they may indirectly affect other financial entities that interact with the ARPC.

Key Provisions

The Financial Sector (Collection of Data) (reporting standard) determination Nos. 12 to 17 of 2022 made by APRA under the Financial Sector (Collection of Data) Act 2001 (the Act) (sections 13 and 15) and the Acts Interpretation Act 1901 (section 33) provide for the revocation of existing reporting standards and the establishment of new versions to accommodate changes in the regulatory framework, particularly concerning the Australian Reinsurance Pool Corporation (ARPC). The determinations, which came into effect upon registration on the Federal Register of Legislation, revise existing reporting standards (GRS 114.1, GRS 114.1_G, GRS 114.3, GRS 114.3_G, GRS 117.0, and GRS 117.0_G) to ensure they align with the prudential framework recognising the ARPC as a high-grade APRA-authorised reinsurer and exempting reinsurance recoverables from the ARPC from capital charges due to the Australian Government guarantee. These determinations impose specific obligations on financial sector entities to comply with the revised reporting standards, which include providing accurate and timely financial and accounting data as mandated by the new standards. Such data are crucial for APRA's supervision and ensuring the financial wellbeing of the entities. The determinations also mandate that these reporting standards apply to reporting periods occurring prior to their commencement, with the obligation to report commencing from the date of the determinations' commencement. Entities must ensure that their reporting aligns with the new standards to avoid any supervisory actions by APRA. Failure to comply with the requirements set out in these determinations may result in regulatory action by APRA. While the determinations themselves do not specify penalties for non-compliance, the Act and associated regulations provide for a range of administrative and financial penalties for breaches of reporting requirements. These can include fines and other enforcement actions that are proportionate to the nature and seriousness of the breach. Additionally, non-compliance could lead to APRA taking supervisory measures against the entities, potentially impacting their operations and reputation. APRA has the discretion to change reporting periods or due dates and vary reporting requirements, decisions which are not subject to merits review. These powers ensure that APRA can adapt to changing circumstances and maintain the effectiveness of its supervisory framework. The consultation process undertaken by APRA prior to the determinations indicated that the amendments were minor and machinery, thus no submissions were received. The Office of Best Practice Regulation (OBPR) confirmed that a Regulation Impact Statement was not required due to the minor nature of the changes. Furthermore, a Statement of Compatibility prepared in accordance with the Human Rights (Parliamentary Scrutiny) Act 2011 confirms that the determinations are compatible with human rights and do not engage any applicable rights or freedoms.

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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.