Financial Sector (Collection of Data) (reporting standard) determination No. 53 of 2023

Administered by Department of the Treasury

Legislation au F2023L00409 Not in force Legislative Instrument

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Financial Sector (Collection of Data) (reporting standard) determination No. 53 of 2023

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 31 March 2023, APRA made Financial Sector (Collection of Data) (reporting standard) determination No. 53 of 2023 which:

(1)   revokes Reporting Standard ARS 180.0 Counterparty Credit Risk made under Financial Sector (Collection of Data) (reporting standard) determination No. 25 of 2019; and

(2)   determines a new Reporting Standard ARS 180.0 Counterparty Credit Risk (ARS 180.0).

The instrument commences upon registration on the Federal Register of Legislation.

1. Background

APRA’s mandate is to ensure the safety and soundness of prudentially regulated financial institutions so that they can meet their financial promises to depositors, policyholders and fund members within a stable, efficient and competitive financial system. APRA carries out this mandate through a prudential framework and is empowered under the Banking Act 1959 to issue prudential standards that set out specific prudential requirements with which authorised deposit taking institutions (ADIs) must comply.

A key component of APRA’s prudential framework is the suite of prudential standards that impose regulatory capital requirements on ADIs for the purpose of ensuring ADIs hold sufficient capital to address the risks associated with their operations.

In July 2017, APRA announced its intention to review the long-standing requirements in the ADI capital framework. After multiple rounds of consultations, APRA released final capital adequacy and credit risk capital requirements for ADIs in November 2021, contained in Prudential Standard APS 110 Capital Adequacy (APS 110), Prudential Standard APS 112 Capital Adequacy: Standardised Approach to Credit Risk (APS 112) and Prudential Standard APS 113 Capital Adequacy: Internal Ratings-based Approach to Credit Risk (APS 113).

The ADI capital reforms will embed the industry’s ‘unquestionably strong’ capital position and improve the flexibility of the framework to respond during periods of stress. To support the capital reforms, APRA has created three updated ADI capital reporting standards:

  • Reporting Standard ARS 110.0 Capital Adequacy (ARS 110.0);
  • Reporting Standard ARS 112.0 Capital Adequacy: Standardised Approach to Credit Risk (ARS 112.0); and
  • Reporting Standard ARS 113.0 Capital Adequacy: Internal Ratings-based Approach to Credit Risk (ARS 113.0).

These new reporting standards ensure that APRA’s reporting framework aligns with APRA’s updated ADI capital framework.

In addition to the three ADI capital reporting standards, APRA has also consulted on and created updated ADI reporting standards that incorporate necessary consequential changes as a result of the new ADI capital framework.

These reporting standards are:

  • Reporting Standard ARS 120.1 Securitisation — Regulatory Capital (ARS 120.1);
  • Reporting Standard ARS 120.2 Securitisation — Supplementary Items (ARS 120.2);
  • Reporting Standard ARS 180.0 Counterparty Credit Risk (ARS 180.0);
  • Reporting Standard ARS 210.0 Liquidity (ARS 210.0);
  • Reporting Standard ARS 221.0 Large Exposures (ARS 221.0); and
  • Reporting Standard ARS 223.0 Residential Mortgage Lending (ARS 223.0).

APRA consulted on changes to these reporting standards that were designed to ensure consistency with the new ADI capital reforms. Amendments to the reporting standards were also proposed to update cross referencing and to provide clarification requested by industry.

2. Purpose and operation of the instrument

The purpose of the instrument is to revoke the existing ADI capital reporting standard and replace it with a new version.

The new reporting standard will ensure that APRA’s reporting framework aligns with its prudential framework. It will also ensure that APRA will continue to receive data that is necessary to supervise ADIs’ compliance against the new capital adequacy and credit risk capital requirements.

The reporting standard requires reporting for reporting periods that occurred prior to the commencement of the reporting standard. The reporting standard is 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 this standard refers 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 ADIs 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 determining, in writing, that an individual ADI of one class of ADI is to be treated, for the purposes of a Reporting Standard, as though it were an ADI of another class of ADI. 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 an ADI 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

APRA undertook public consultation on proposed updates to ADI capital reporting standards from April 2022 to October 2022 as part of the consultation on updates to the ADI capital reporting and prudential framework.[1] Further details on the consultation from April to October 2022 is provided below.

On 7 April 2022, APRA commenced consultation on draft interim versions of ARS 110.0, ARS 112.0, and ARS 113.0 that would incorporate updates to APRA’s ADI capital framework. APRA also commenced consultation on consequential amendments to ARS 180.0, ARS 221.0 and ARS 223.0 due to the new capital framework as part of the same consultation[2].

On 26 July 2022, APRA initiated consultation on minor consequential amendments to ARS 110.0, ARS 113.0, ARS 120.1, ARS 120.2, ARS 180.0, and ARS 210.0. These amendments were to support proposed updates to APRA’s prudential framework that would ensure consistency with the new ADI capital reforms. Amendments to the reporting standards were also proposed to update cross referencing and to provide clarification requested by industry.

Submissions on both stages of consultation were received from reporting ADIs, industry bodies, and regulatory technology providers. APRA incorporated feedback received into the final versions of the reporting standards, including adding clarification to reporting instructions and forms as requested by industry.

APRA released a response to submissions to its April 2022 consultation on 10 August 2022. The response included a letter to ADIs and updated versions of ARS 110.0, ARS 112.0, ARS 113.0, ARS 180.0, ARS 221.0, and ARS 223.0[3]. In response to feedback on ARS 110.0, ARS 112.0, and ARS 113.0, APRA clarified the reporting treatment for exposures in New Zealand subsidiaries in these reporting standards.

On 31 October 2022 APRA released a response to submissions on the July 2022 consultation [4].  ARS 110.0 and ARS 113.0 contained minor updates to provide clarifications and correct typographical errors. ARS 120.1, ARS 120.2, and ARS 180.0 were updated to reflect the treatment of exposures to New Zealand. ARS 210.0 contained minor changes for consequential amendments to the Net Stable Funding Ratio requirements. APRA is satisfied the consultation was appropriate and reasonably practicable.

4. Regulation Impact Statement

The Office of Impact Analysis confirmed that a Regulation Impact Statement was 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

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

Financial Sector (Collection of Data) (reporting standard) determination No. 53 of 2023

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 Instrument

The purpose of the Legislative Instrument is to determine a new Reporting Standard ARS 180.0 Counterparty Credit Risk that incorporates updates to APRA’s capital adequacy and credit risk capital requirements and minor consequential updates required as a result of the new capital requirements.

Human rights implications

APRA has assessed the Legislative Instrument and is 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 Instrument is compatible with human rights.

Conclusion

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

 

[1] Refer to: Revisions to the capital framework for authorised deposit-taking institutions | APRA

[2] Refer to: Revisions to the ADI capital framework: Interim reporting standards for consultation and parallel run expectations | APRA

[3] Refer to: Credit risk reporting – Response to submissons | APRA

[4] Refer to: ADI capital reforms: Consequential amendments | APRA

Overview

The Financial Sector (Collection of Data) (reporting standard) determination No. 53 of 2023 was enacted by the Australian Prudential Regulation Authority (APRA) under the Financial Sector (Collection of Data) Act 2001. This determination was introduced to address the need for updated reporting standards in the financial sector, specifically in response to the newly revised capital adequacy and credit risk capital requirements for authorised deposit-taking institutions (ADIs). The determination revokes the existing Reporting Standard ARS 180.0 Counterparty Credit Risk and replaces it with an updated version that aligns with APRA's revised prudential framework. The primary policy objective of this determination is to ensure that APRA receives the necessary data to supervise ADIs' compliance with the new capital requirements, thereby maintaining the stability and efficiency of the financial system. The instrument was developed following extensive consultation with reporting ADIs, industry bodies, and regulatory technology providers between April and October 2022. APRA incorporated feedback into the final versions of the reporting standards, including clarifications and updates to cross-referencing and reporting instructions. The Legislative Instrument is compatible with human rights, as APRA has assessed that it does not engage any of the applicable rights or freedoms recognised in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. The instrument aims to ensure the safety and soundness of prudentially regulated financial institutions while providing sufficient capital to address the risks associated with their operations.

Scope and Application

The Financial Sector (Collection of Data) (reporting standard) determination No. 53 of 2023, made under the Financial Sector (Collection of Data) Act 2001 by the Australian Prudential Regulation Authority (APRA), revokes the existing Reporting Standard ARS 180.0 Counterparty Credit Risk and introduces a new version to align APRA’s reporting framework with its updated Authorised Deposit-taking Institution (ADI) capital reforms. The new reporting standard, ARS 180.0, pertains specifically to financial entities within the ADI sector, which includes banks, credit unions, building societies, and other authorised deposit-taking institutions in Australia. This determination ensures that APRA will continue to receive essential data necessary for overseeing ADIs' compliance with the new capital adequacy and credit risk capital requirements. The instrument applies nationally across Australia, impacting all ADIs regulated by APRA. Notably, the reporting standard is prospective and does not have retrospective effect; the obligation to report on past periods commences from the commencement of the new standard. While APRA retains discretionary powers to adjust reporting periods or due dates and classify ADIs differently for reporting purposes, such decisions are not subject to merits review due to their significant public interest element. The instrument does not specify any exclusions or exemptions and is effective from its registration on the Federal Register of Legislation.

Key Provisions

The Financial Sector (Collection of Data) (reporting standard) determination No. 53 of 2023 revokes the existing Reporting Standard ARS 180.0 Counterparty Credit Risk and introduces a new reporting standard to ensure alignment with APRA's updated prudential framework, particularly the capital adequacy and credit risk capital requirements for authorised deposit-taking institutions (ADIs). This determination is made under section 13(1) of the Financial Sector (Collection of Data) Act 2001 and is effective from its registration on the Federal Register of Legislation. Section 15(1) of the Act empowers APRA to specify the commencement date, which in this case is 31 March 2023. The determination imposes obligations on ADIs to comply with the new reporting requirements, which include providing financial data necessary for APRA to supervise their adherence to the updated capital adequacy and credit risk capital standards. This data is critical for APRA's assessment of the financial wellbeing of ADIs, particularly their capital adequacy. Failure to provide timely and complete data may result in APRA missing key indicators of imprudent risk or distress, potentially jeopardising supervisory decisions. The reporting standard also mandates that data be provided for reporting periods that occurred prior to the commencement of the new standard, with the obligation to report on these periods starting from the date of commencement. The Act imposes several obligations on the entities it governs, including the requirement to furnish APRA with the specified financial and operational data in accordance with the new reporting standard. ADIs must ensure that the data provided is accurate, complete, and timely to assist APRA in its supervisory role. Additionally, APRA retains discretionary powers to change reporting periods or due dates and to reclassify ADIs between different classes for reporting purposes. These decisions are not subject to merits review as they involve significant public interest considerations. The obligations are designed to facilitate APRA's ability to monitor and ensure compliance with the updated prudential standards. There are no specific offences, penalties, or civil/criminal consequences mentioned in the Act for breaches of the reporting standards. However, the importance of compliance is underscored by the potential impact on APRA's supervisory actions and the overall stability of the financial system. Non-compliance or failure to provide accurate and timely data may lead to APRA taking enforcement actions under other provisions of the Act or related legislation. While the determination itself does not specify penalties, the overarching regulatory framework under which APRA operates includes provisions for financial penalties, public censure, and other corrective measures to ensure adherence to regulatory requirements.

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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.