Financial Sector (Collection of Data) determination No. 36 of 2016
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.
On 26 October 2016, APRA made Financial Sector (Collection of Data) (reporting standard) determination No. 36 of 2016 (the instrument) which revokes the following instruments:
(1) Financial Sector (Collection of Data) (reporting standard) determination No. 1 of 2007, including Reporting Standard MRS 120.0 Capital Base made under that Determination;
(2) Financial Sector (Collection of Data) (reporting standard) determination No. 2 of 2007, including Reporting Standard MRS 130.0 Off Balance Sheet Business - Credit Substitutes Provided made under that Determination;
(3) Financial Sector (Collection of Data) (reporting standard) determination No. 3 of 2007, including Reporting Standard MRS 130.1 Off Balance Sheet Business – Liquidity Support Facilities Obtained made under that Determination;
(4) Financial Sector (Collection of Data) (reporting standard) determination No. 4 of 2007, including Reporting Standard MRS 130.2 Off Balance Sheet Business – Charges Granted made under that Determination;
(5) Financial Sector (Collection of Data) (reporting standard) determination No. 5 of 2007, including Reporting Standard MRS 130.3 Off Balance Sheet Business - Credit Support Received made under that Determination;
(6) Financial Sector (Collection of Data) (reporting standard) determination No. 6 of 2007, including Reporting Standard MRS 140.0 – Investments – Direct Interest Rate Holdings made under that Determination;
(7) Financial Sector (Collection of Data) (reporting standard) determination No. 7 of 2007, including Reporting Standard MRS 140.1 Investments – Direct Equity Holdings made under that Determination;
(8) Financial Sector (Collection of Data) (reporting standard) determination No. 8 of 2007, including Reporting Standard MRS 140.2 Investments- Direct Property Holdings made under that Determination;
(9) Financial Sector (Collection of Data) (reporting standard) determination No. 9 of 2007, including Reporting Standard MRS 140.3 Investments - Loans and Advances made under that Determination;
(10) Financial Sector (Collection of Data) (reporting standard) determination No. 10 of 2007, including Reporting Standard MRS 140.4 Investments - Asset Indirectly Held made under that Determination;
(11) Financial Sector (Collection of Data) (reporting standard) determination No. 11 of 2007, including Reporting Standard MRS 150.0 Asset Exposures made under that Determination;
(12) Financial Sector (Collection of Data) (reporting standard) determination No. 12 of 2007, including Reporting Standard MRS 160.0 Derivative Activity made under that Determination;
(13) Financial Sector (Collection of Data) (reporting standard) determination No. 13 of 2007, including Reporting Standard MRS 210.0 Outstanding Claims Liability made under that Determination;
(14) Financial Sector (Collection of Data) (reporting standard) determination No. 14 of 2007, including Reporting Standard MRS 300.0 Statement of Financial Position made under that Determination;
(15) Financial Sector (Collection of Data) (reporting standard) determination No. 15 of 2007, including Reporting Standard MRS 310.0 Statement of Financial Performance made under that Determination;
(16) Financial Sector (Collection of Data) (reporting standard) determination No. 16 of 2007, including Reporting Standard MRS 310.2 Claims Expenses and Reinsurance Recoveries made under that Determination; and
(17) Financial Sector (Collection of Data) (reporting standard) determination No. 17 of 2007, including Reporting Standard MRS 310.3 Investment and Operating Income and Expenses made under that Determination.
The instrument commences on the date it is registered on the Federal Register of Instruments.
- Background
APRA began collecting data from Medical Defence Organisations (MDOs) in 2004 as part of the Government’s package of reforms to address the regulation of medical indemnity cover. The MDO data collection assisted the Government in the implementation and monitoring of the medical indemnity reforms against their stated objectives. The collection also allowed APRA to develop a greater understanding of the financial position of the overall group to which an APRA-regulated medical indemnity insurer belongs.
The reporting standards for the MDO collection were last amended in 2007. APRA assesses the data that is collected under reporting standards for its continuing relevance and purpose. In 2015, APRA assessed its non-prudential data collection and determined that APRA had minimal prudential use for the industry-wide data provided by MDOs. The review also assessed that there were less costly means for APRA to access similar information about the MDOs.
Consistent with APRA’s commitment to look for opportunities to reduce compliance costs for business and the community, APRA considers that the benefit obtained from the use of the data collection no longer outweighs the reporting costs to MDOs. Consequently, APRA is revoking all the relevant reporting standards and their associated reporting forms:
- Reporting Standard MRS 120.0 Capital Base;
- Reporting Standard MRS 130.0 Off Balance Sheet Business – Direct Credit Substitutes Provided;
- Reporting Standard MRS 130.1 Off Balance Sheet Business – Liquidity Support Facilities Obtained;
- Reporting Standard MRS 130.2 Off Balance Sheet Business – Charges Granted;
- Reporting Standard MRS 130.3 Off Balance Sheet Business – Credit Support Received;
- Reporting Standard MRS 140.0 Investments – Direct Interest Rate Holdings;
- Reporting Standard MRS 140.1 Investments – Direct Equity Holdings;
- Reporting Standard MRS 140.2 Investments – Direct Property Holdings;
- Reporting Standard MRS 140.3 Investments – Loans and Advances;
- Reporting Standard MRS 140.4 Investments – Assets Indirectly Held;
- Reporting Standard MRS 150.0 Asset Exposures;
- Reporting Standard MRS 160.0 Derivative Activity;
- Reporting Standard MRS 210.0 Outstanding Claims Liabilities;
- Reporting Standard MRS 300.0 Statement of Financial Position;
- Reporting Standard MRS 310.0 Statement of Financial Performance;
- Reporting Standard MRS 310.2 Claims Expense and Reinsurance Recoveries; and
- Reporting Standard MRS 310.3 Investment and Operating Income and Expenses.
2. Purpose and operation of the instrument
The purpose of the instrument is to revoke the reporting standard listed above. The data collected under these reporting standards is no longer required, and the revocation of the reporting standards will reduce the reporting burden of MDOs.
3. Consultation
APRA undertook a four week consultation on its proposed revocation of the reporting standards between 2 September 2016 and 30 September 2016. APRA received four submissions from the MDOs.
The consultation clearly communicated to the industry APRA’s proposal to cease collection and APRA’s position on the benefits obtained verses the cost involved in collecting this information. All the four submissions acknowledged APRA’s proposal and supported the revocation of above listed reporting standards.
APRA also consulted with Treasury on the proposed revocation of the reporting standards and has no objections to the proposal.
4. Regulatory Impact Statement
APRA has consulted with the Office of Best Practice Regulation (OBPR) and 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 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
Human Rights (Parliamentary Scrutiny) Act 2011
Financial Sector (Collection of Data) (reporting standard) determinations No. 3 of 2016
This Legislative Instrument is 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
This legislative instrument revokes the reporting standards that apply to Medical Defence Organisations (MDOs) for the purposes of collecting data.
Human rights implications
APRA has assessed this instrument against the international instruments listed in section 3 of the HRPS Act and has determined 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.
The instrument removes reporting obligations for DMFs, and does not have any direct or indirect effects on the rights of individual persons. Consequently, the instrument 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, this legislative instrument is compatible with human rights.
Conclusion
This legislative instruments is compatible with human rights as it does not raise any human rights issues.