Financial Sector (Collection of Data) (reporting standard) determination No. 57 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.
On 31 March 2023, APRA made Financial Sector (Collection of Data) (reporting standard) determination No. 57 of 2023 (the instrument) which revokes Reporting Standard ARS 118.1 Other Off-balance Sheet Exposures (ARS 118.1) made under Financial Sector (Collection of Data) (reporting standard) determination No. 24 of 2019.
The instrument takes effect upon registration on the Federal Register of Legislation.
- Background
The purpose of ARS 118.1 was to collect financial data on specified off-balance sheet exposures authorised deposit-taking institutions (ADIs). As the data collected under ARS 118.1 will now be collected under other ADI reporting standards, the reporting standard can now be revoked.
2. Purpose and operation of the instrument
The purpose of the instrument is to revoke ARS 118.1 as the data collected under this reporting standard is now collected under other ADI reporting standards. This will reduce duplication of reporting for ADIs.
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] Submissions were received from both reporting entities and industry bodies, which suggested APRA discontinue ARS 118.1 as the data collected by ARS 118.1 would be replaced by the new ADI capital reporting standards. APRA confirmed its intention to revoke ARS 118.1 in its August 2022 letter Credit risk reporting – Response to submissions.[2]
4. Regulation Impact Statement
The Office of Best Practice Regulation has advised that a Regulation Impact Statement is not required for this legislative instrument.
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. 57 of 2023
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 Instrument
The purpose of this instrument is to revoke Reporting Standard ARS 118.1 Other Off-balance Sheet Exposures made under Financial Sector (Collection of Data) (reporting standard) determination No. 24 of 2019.
Human rights implications
APRA has assessed the 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
The Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
[1] Further details on APRA’s consultation can be found at: https://www.apra.gov.au/revisions-to-capital-framework-for-authorised-deposit-taking-institutions
[2] APRA’s letter is available at: https://www.apra.gov.au/credit-risk-reporting-%E2%80%93-response-to-submissons
Overview
The Financial Sector (Collection of Data) (reporting standard) determination No. 57 of 2023, enacted by the Australian Prudential Regulation Authority (APRA), aims to address the issue of redundancy in data collection practices within the financial sector. This instrument revokes the previous Reporting Standard ARS 118.1 Other Off-balance Sheet Exposures, which was established under the Financial Sector (Collection of Data) (reporting standard) determination No. 24 of 2019. The revocation was motivated by the recognition that the data previously collected under ARS 118.1 is now being gathered under other authorised deposit-taking institution (ADI) reporting standards, thereby eliminating the need for duplicative reporting processes. APRA's decision to revoke ARS 118.1 was informed by extensive public consultation, which highlighted the redundancy and suggested the discontinuation of this reporting standard. This legislative action seeks to streamline reporting requirements for ADIs, enhancing efficiency and reducing the administrative burden associated with redundant data collection.
Scope and Application
The Financial Sector (Collection of Data) (reporting standard) determination No. 57 of 2023, made under the Financial Sector (Collection of Data) Act 2001 by the Australian Prudential Regulation Authority (APRA), revokes Reporting Standard ARS 118.1 Other Off-balance Sheet Exposures, which was established to collect financial data on specified off-balance sheet exposures authorised deposit-taking institutions (ADIs). This determination applies to all ADIs subject to the Financial Sector (Collection of Data) Act 2001, aiming to eliminate redundancy in reporting requirements. By revoking ARS 118.1, the new standard seeks to streamline the reporting process for ADIs by integrating the data collection into other existing ADI reporting standards. This legislative instrument operates on a national level, affecting all authorised deposit-taking institutions across Australia. APRA's decision to revoke ARS 118.1 follows public consultation and feedback from reporting entities and industry bodies, reflecting a commitment to reducing unnecessary reporting burdens. The instrument takes effect upon its registration on the Federal Register of Legislation, and its compatibility with human rights has been affirmed in accordance with the Human Rights (Parliamentary Scrutiny) Act 2011.
Key Provisions
The Financial Sector (Collection of Data) (reporting standard) determination No. 57 of 2023, issued by the Australian Prudential Regulation Authority (APRA) under sections 13 and 15 of the Financial Sector (Collection of Data) Act 2001, revokes the previously established reporting standard ARS 118.1 Other Off-balance Sheet Exposures (ARS 118.1). This determination, effective upon registration on the Federal Register of Legislation, aims to streamline reporting requirements by eliminating redundancy in data collection processes for authorised deposit-taking institutions (ADIs). By revoking ARS 118.1, APRA ensures that the financial data previously collected under this standard is now incorporated into other ADI reporting standards, thereby reducing the burden on ADIs who previously had to report on the same information under multiple standards.
This determination imposes specific obligations on ADIs governed by the Financial Sector (Collection of Data) Act 2001. ADIs are required to adhere to the new reporting standards that have replaced ARS 118.1, ensuring that their financial and accounting data are reported accurately and comprehensively under the updated framework. APRA’s determination mandates that ADIs must cease reporting under ARS 118.1 and instead align their reporting practices with the revised standards. This includes ensuring that all necessary data is collected, processed, and reported in accordance with the new requirements, which aim to maintain the integrity and reliability of financial data within the sector.
In terms of consequences for non-compliance, while the determination itself does not explicitly outline penalties for breach, the Financial Sector (Collection of Data) Act 2001 provides a framework for enforcement. Under the Act, failure to comply with reporting standards can lead to enforcement actions, including the imposition of fines and other regulatory measures. The exact penalties for non-compliance are not detailed within the determination but are governed by the broader provisions of the Act, which allows for significant fines and potential legal action against entities that do not adhere to the mandated reporting standards. It is important for ADIs to ensure strict compliance with the new standards to avoid any adverse regulatory consequences.
The revocation of ARS 118.1 is part of a broader effort by APRA to refine and modernise the financial reporting framework for ADIs. This determination follows extensive consultation with industry stakeholders, who recommended the elimination of ARS 118.1 due to its redundancy with other reporting standards. APRA's assessment, as outlined in the Statement of Compatibility prepared in accordance with the Human Rights (Parliamentary Scrutiny) Act 2011, confirms that the revocation does not engage any of the applicable rights or freedoms recognised in international human rights instruments, thereby maintaining compatibility with human rights.