Financial Sector (Collection of Data) (reporting standard) determination No. 6 of 2016 - GRS 114.1 - G Assets by Counterparty Grade (Level 2 Insurance Group)

Administered by Department of the Treasury

Legislation au F2016L01230 Not in force Legislative Instrument

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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) determinations Nos. 1 to 15 of 2016 were introduced to address the regulatory burden faced by financial sector entities, particularly Level 2 insurance groups, by reducing their reporting requirements. Enacted by the Australian Prudential Regulation Authority (APRA), these determinations aim to streamline the reporting process and alleviate unnecessary administrative costs for businesses. This initiative was prompted by the overlap in due dates for the second semi-annual and annual returns, which had caused redundancy in reporting for these entities. APRA, committed to minimising compliance costs, determined that removing the duplicate reporting requirement would benefit the industry without adversely affecting the rights or imposing liabilities on parent entities. The determinations are in line with APRA's broader regulatory cost savings project and have been assessed to be compatible with human rights, as confirmed by the Office of Best Practice Regulation.

Scope and Application

The Financial Sector (Collection of Data) Determination Nos. 1 to 15 of 2016, issued under the Financial Sector (Collection of Data) Act 2001, applies to entities within the financial sector, particularly Level 2 insurance groups regulated by the Australian Prudential Regulation Authority (APRA). These determinations establish new reporting standards for financial and accounting data, effectively revoking previous standards and introducing updated requirements to streamline the reporting process. The geographic reach of these determinations is national, applying across Australia. These instruments do not specify exclusions or exemptions but focus on reducing the reporting burden on Level 2 insurance groups by eliminating the need for a duplicate second semi-annual report, which previously coincided with the due date for the audited annual return. The determinations came into effect on 30 June 2016 and apply to reporting periods ending on or after that date. APRA has ensured that parent entities of Level 2 insurance groups will not be adversely affected by the retrospective operation of these instruments. The Act extends its application through subordinate instruments, allowing APRA to further specify and amend reporting standards as necessary.

Key Provisions

The Financial Sector (Collection of Data) determination Nos. 1 to 15 of 2016 made by the Australian Prudential Regulation Authority (APRA) are significant legislative instruments that primarily aim to revise the reporting requirements for financial sector entities, particularly focusing on Level 2 insurance groups. Under the Financial Sector (Collection of Data) Act 2001, APRA has the authority to determine reporting standards that financial sector entities must adhere to (subsection 13(1)). These determinations (subsection 15(1)) specify the standards related to financial and accounting data and information about the entities' business activities. Additionally, APRA has the power to revoke previous reporting standards and replace them with new ones, as provided under subsection 33(3) of the Acts Interpretation Act 1901. The determinations themselves are comprehensive, addressing a range of reporting standards. For instance, Financial Sector (Collection of Data) (reporting standard) determination No. 1 of 2016 revokes the previous Reporting Standard GRS 001 Reporting Requirements and establishes new ones. Similarly, other determinations, from No. 2 to No. 15, revoke and set new reporting standards for various aspects such as prescribed capital amounts, capital base determinations, related party exposures, asset risk charges, and more. These standards are specifically tailored to Level 2 insurance groups and cover areas like financial positions, income statements, and various risk charges. These instruments impose specific obligations on the financial sector entities governed by them. Primarily, they require these entities to comply with the newly determined reporting standards, which means submitting accurate, timely, and comprehensive financial and operational data to APRA. The primary goal is to ensure that APRA has the necessary information to effectively supervise and regulate the financial activities of these entities. By doing so, these determinations seek to enhance transparency, reduce unnecessary reporting burdens, and ensure that the financial sector operates within the regulatory framework designed to protect consumers and maintain financial stability. Non-compliance with these reporting standards can lead to significant consequences. Although the specific penalties are not detailed in the explanatory statement, breaches of such standards could potentially result in enforcement actions by APRA. These actions might include fines, legal proceedings, or other regulatory sanctions. The severity of the consequences would depend on the nature and extent of the non-compliance, as well as any resulting harm to the financial system or consumers. The instruments are designed to ensure that financial sector entities understand and meet their reporting obligations to maintain the integrity and stability of the financial system.

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