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

Administered by Department of the Treasury

Legislation au F2022L01353 Not 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 address the need for updated reporting standards within the financial sector, specifically to align with the Australian Prudential Regulation Authority’s (APRA) prudential framework in recognition of the Australian Government’s cyclone and related flood damage reinsurance pool. These determinations, made under the Financial Sector (Collection of Data) Act 2001, aim to ensure that the reporting framework appropriately reflects the changes related to the Australian Reinsurance Pool Corporation (ARPC). The Australian Government guarantee supporting the reinsurance pool means that reinsurance recoverables from the ARPC should not be subject to a capital charge. These determinations revoke existing reporting standards and introduce new versions that incorporate these consequential amendments. The determinations were made by APRA, exercising its power under the Act, and are designed to maintain the integrity and reliability of the data collected from financial entities, which is crucial for APRA’s supervisory actions. The changes are not retrospective, meaning they apply to reporting periods occurring after their commencement.

Scope and Application

The Financial Sector (Collection of Data) (reporting standard) determination Nos. 12 to 17 of 2022, made under the Financial Sector (Collection of Data) Act 2001, apply to financial sector entities in Australia. These entities are required to comply with the reporting standards established by the Australian Prudential Regulation Authority (APRA) concerning the collection and submission of financial and accounting data. The new determinations, which came into effect on 12 October 2022, specifically address the reporting framework for general insurers and modify certain existing standards to align with the Australian Government’s cyclone and related flood damage reinsurance pool. The amendments recognise the Australian Reinsurance Pool Corporation (ARPC) as a high-grade APRA-authorised reinsurer and clarify that reinsurance recoverables from the ARPC are not subject to a capital charge, reflecting the Australian Government guarantee supporting the reinsurance pool. The scope of these instruments is limited to the financial sector and does not extend to other industries or entities outside of this purview. APRA retains the discretion to change reporting periods or due dates and vary reporting requirements, decisions which are not subject to merits review. The instruments do not introduce new exclusions or exemptions beyond those already present in the repealed standards. The regulatory impact was deemed minor and machinery, and no submissions were received during the consultation period, leading to the conclusion that the amendments were appropriately minor and procedural.

Key Provisions

The main operative sections of the Financial Sector (Collection of Data) (reporting standard) determination Nos. 12 to 17 of 2022, include the revocation of the existing reporting standards and the establishment of new reporting standards. Specifically, determination No. 12 of 2022 revokes GRS 114.1 Assets by Counterparty Grade and determines a new version of GRS 114.1. Determination No. 13 of 2022 revokes GRS 114.1_G Assets by Counterparty Grade (Level 2 Insurance Group) and determines a new version of GRS 114.1_G. Determination No. 14 of 2022 revokes GRS 114.3 Off-balance Sheet Business and determines a new version of GRS 114.3. Determination No. 15 of 2022 revokes GRS 114.3_G Off-balance Sheet Business (Level 2 Insurance Group) and determines a new version of GRS 114.3_G. Determination No. 16 of 2022 revokes GRS 117.0 Asset Concentration Risk Charge and determines a new version of GRS 117.0. Finally, determination No. 17 of 2022 revokes GRS 117.0_G Asset Concentration Risk Charge (Level 2 Insurance Group) and determines a new version of GRS 117.0_G. These new reporting standards aim to align with the Australian Government’s cyclone and related flood damage reinsurance pool, recognising the Australian Reinsurance Pool Corporation (ARPC) as a high-grade APRA-authorised reinsurer and ensuring that reinsurance recoverables from the ARPC are not subject to a capital charge. These determinations impose specific obligations and requirements on the financial sector entities governed by the Financial Sector (Collection of Data) Act 2001. Firstly, they mandate the collection and reporting of financial and accounting data, as well as other relevant information about the business and activities of these entities. The entities must comply with the newly determined reporting standards, which include the new versions of GRS 114.1, GRS 114.1_G, GRS 114.3, GRS 114.3_G, GRS 117.0, and GRS 117.0_G. These standards outline the specific data to be reported and the format in which it should be submitted. The reporting requirements apply to reporting periods that occurred prior to the commencement of the reporting standard, ensuring that entities provide complete and timely data to the Australian Prudential Regulation Authority (APRA). Failure to comply with the reporting standards set out in these determinations can result in various consequences. While the determinations themselves do not explicitly outline specific offences, penalties, or civil/criminal consequences for breach, the Financial Sector (Collection of Data) Act 2001 provides a framework for enforcement. Under section 20 of the Act, APRA has the authority to issue infringement notices for minor breaches, with penalties not exceeding $13,200 for corporations and $2,640 for individuals. More serious breaches may lead to court proceedings, where penalties can be more severe. Additionally, non-compliance may result in APRA taking supervisory actions against the entities, which can include imposing financial penalties, requiring additional reporting, or even revoking the entity's authorisation to operate in the financial sector. The potential for such consequences underscores the importance of adhering to the reporting standards and ensuring accurate and timely data submission.

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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.