Financial Sector (Collection of Data) (reporting standard) determination No. 2 of 2016 - GRS 110.1 - G Prescribed Capital Amount (Level 2 Insurance Group)

Administered by Department of the Treasury

Legislation au F2016L01226 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 were enacted to address inefficiencies and unnecessary reporting burdens within the financial sector, specifically targeting Level 2 insurance groups. These determinations, made by the Australian Prudential Regulation Authority (APRA) under the Financial Sector (Collection of Data) Act 2001, aim to streamline the reporting process by removing duplicate reporting requirements. The instruments were introduced to reduce compliance costs for businesses and the community, aligning with APRA's commitment to regulatory efficiency. The determinations revoke existing reporting standards and introduce new ones that eliminate the second semi-annual return for Level 2 insurance groups, thus reducing the overall reporting burden. This initiative follows consultations with industry associations and feedback indicating opportunities for regulatory cost savings. The determinations commenced on 30 June 2016, with no adverse impact on parent entities of Level 2 insurance groups due to the timing of the reporting period deadlines.

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, relate to the standards for reporting financial or accounting data and other information for financial sector entities, specifically targeting Level 2 insurance groups. These determinations aim to streamline and reduce the reporting burden for Level 2 insurance groups by eliminating the requirement for a second semi-annual return, which had coincided with the due date for the audited annual return, thereby reducing unnecessary duplication in reporting. These instruments apply to reporting periods ending on and after 30 June 2016 and are designed to enhance efficiency within the financial sector without imposing any new liabilities or adversely affecting existing rights of entities subject to the Act. The legislative instruments are part of APRA's initiative to alleviate compliance costs for the industry, achieved through consultation with industry bodies and confirmation by the Office of Best Practice Regulation that the changes are of a minor nature, thus not requiring a Regulatory Impact Statement. These determinations are compatible with human rights as assessed by APRA, given they do not engage any of the rights or freedoms recognised in the international human rights instruments.

Key Provisions

The Financial Sector (Collection of Data) Determination Nos. 1 to 15 of 2016, made under the Financial Sector (Collection of Data) Act 2001, introduce new reporting standards for financial sector entities, particularly focusing on Level 2 insurance groups. These determinations (sections 1-15) revoke existing reporting standards and set new ones aimed at reducing the reporting burden on these entities by eliminating the requirement for a second semi-annual return. This change applies to reporting periods ending on or after 30 June 2016. Entities governed by these determinations, especially Level 2 insurance groups, are now required to submit fewer reports, streamlining the reporting process and potentially reducing compliance costs. The new reporting standards focus on various aspects, such as prescribed capital amounts, capital base determinations, related party exposures, asset risk charges, and other financial metrics. The entities must ensure their data collection and reporting practices align with these updated standards to remain compliant. Failure to comply with the new reporting standards could result in regulatory scrutiny and potential enforcement actions by the Australian Prudential Regulation Authority (APRA). While the determinations do not explicitly state specific penalties for non-compliance, entities that do not adhere to the new standards may face consequences under the broader provisions of the Financial Sector (Collection of Data) Act 2001. These could include fines or other regulatory penalties as deemed appropriate by APRA. Additionally, persistent non-compliance could affect the entity's standing and regulatory approval, impacting their operations within the financial sector. The determinations, by removing redundant reporting requirements, aim to alleviate the administrative burden on Level 2 insurance groups without compromising the quality and timeliness of the financial data submitted to APRA. This change is expected to enhance efficiency and reduce costs for the entities involved, fostering a more streamlined and effective regulatory environment.

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