Chapter 1 - Inquiry into the Provisions of the Financial Sector Legislation Amendment Bill (No. 2) 2002
Background
1.1
The Financial Sector Legislation Amendment Bill
(No. 2) 2002 was presented to the House of Representatives on 26 June 2002 by
the Hon. Peter Slipper MP, Parliamentary Secretary to the Minister for Finance
and Administration. The Bill was passed in the House of Representatives on 14
November 2002.
Purpose of the Bill
The Bill amends a
number of financial sector Acts.
The most significant
amendments are to the Banking Act 1959 which:
- provide for the application of a ‘fit and proper’ test to
directors and senior managers of ADIs (authorised deposit-taking institutions)
and authorised NOHCs (Non-operating holding companies);
- provide the Australian Prudential Regulation Authority (APRA)
with the means to remove auditors who fail to perform adequately and properly;
- require ADIs, authorised NOHCs of an ADI and their subsidiaries,
to notify APRA immediately of any breaches of prudential requirements and any
material adverse developments;
- allow APRA to apply prudential standards on a consolidated group
basis;
- provide additional grounds for APRA to revoke the authority
granted to an ADI or NOHC where the application for the authority contained
false or misleading information; and
- correct a discrepancy between the indemnity provisions of the
Banking Act and the APRA Act which relates to the extent of protection
available to APRA officers under these acts.
The Bill also amends the Insurance Act 1973, the Superannuation
(Resolution of Complaints) Act 1993, the Superannuation Industry
(Supervision) Act 1993, the ASIC Act 2001, the Corporations Act
2001 and the Corporations (Repeals, Consequentials and Transitionals)
Act 2001.
Reference of the Bill
1.2
On 13 November, on the recommendation of the
Senate Selection of Bills Committee, the Senate referred the provisions of the
Bill for inquiry to the Economics Legislation Committee. The Committee was to
report by 10 December 2002.[1]
The reporting date was subsequently extended to 12 December.
Submissions
1.3
The Committee advertised the inquiry in the Australian
and the Australian Financial Review on 20 November and on its web site.
It also wrote to banks, credit unions and building societies, relevant
departments and agencies, organisations and individuals interested in the
proposed legislation, alerting them to the inquiry and inviting them to make a
submission. In all, the Committee contacted over 250 parties about the inquiry
and received nine submissions. These are listed in Appendix 1. All but one of
the submissions are public documents.
Hearing and evidence
1.4
The Committee held one public hearing on this
inquiry in Parliament House, Canberra, on Thursday, 5 December. It took
evidence from the APRA and the Department of the Treasury. Witnesses who
presented evidence before the Committee are listed in Appendix 2.
1.5
Copies of the Hansard transcript are tabled for
the information of the Senate. They are also available through the internet at https://www.aph.gov.au/hansard. Additional information provided to the Committee
is also tabled with this report.
Acknowledgment
1.6
The Committee is grateful to, and wishes to
thank, all those who assisted with its inquiry.
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