Chapter 1 - Introduction
Background
1.1
The Financial Sector Legislation Amendment (Discretionary Mutual Funds
and Direct Offshore Foreign Insurers) Bill 2007 and the Corporations (National
Guarantee Fund Levies) Amendment Bill 2007 were introduced into the House of
Representatives on 21 June 2007 by the Parliamentary Secretary to the Treasurer
the Hon. Chris Pearce, MP.
1.2
On 21 June 2007, on the recommendation of the Selection of Bills
Committee, the Senate referred the provisions of the bills to the Standing Committee
on Economics for inquiry and report by 31 July 2007.[1]
Conduct of the inquiry
1.3
The committee advertised the inquiry in the Australian newspaper
on 27 June 2007 and invited written submissions by 9 July 2007. Details of the inquiry were placed on the committee's website. The committee also wrote to a
number of organisations and stakeholder groups inviting written submissions.
1.4
The committee received eight submissions. These are listed in Appendix
1. A public hearing was held in Melbourne on Friday 27 July 2007. Treasury gave evidence via teleconference and addressed the concerns raised in the submissions.
Acknowledgments
1.5
The committee thanks all those who contributed to its inquiry by
preparing written submissions. Their work has been of considerable value to
the committee.
Background to the bill
1.6
The Bill implements the approach to the
regulation of Discretionary Mutual Funds (DMFs) and Direct Offshore Foreign
Insurers (DOFIs) announced by the Minister for Revenue and Assistant Treasurer
on 3 May 2007. DOFIs will be prudentially regulated under the Insurance Act.
DMFs will not be prudentially regulated but information will be collected to
determine the nature and scope of their operations.[2]
1.7
It addresses an outstanding HIH Royal Commissioner’s recommendation and
a regulatory gap identified in the International Monetary Fund’s 2006 Financial
Sector Assessment Programme for Australia, and makes a minor amendment to
support changes made by the Corporations (National Guarantee Fund Levies)
Amendment Bill 2007. This complementary Bill will impose a cap on levies
payable.[3]
Outline of the bill
1.8
The Bill is structured into three Schedules.
- Schedule 1 – 'Amendments commencing on Royal Assent' – introduces
amendment relating to the proposed monitoring of Discretionary Mutual Funds;
- Schedule 2– 'Amendments commencing on 1 July 2008' – introduces provisions relating to the proposed regulation of DOFIs and their supervision by
the Australian Prudential Regulation Authority (APRA); and
- Schedule 3 – 'Amendments commencing on the 28th day after the
day on which this Act receives the Royal Assent' – introduces the amendment to
the Corporations Act 2001 which caps the levy payable under the Corporations
(National Guarantee Fund Levies) Amendment Bill 2001.
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