APRA ASIC Working Group status report

ASIC has reported on how it and APRA have worked with the Treasury to remove some
of the legislative sources of regulatory overlap, inconsistency or
duplication. The agencies are now reviewing their administrative
practices for unnecessary regulatory burden and evaluating how any
overlaps, inconsistencies or duplication might be reduced.

Interestingly ASIC says that ASIC and APRA jointly regulate fewer than 600 entities and as a result of existing legislative carve-outs there is little overlap between the agencies’ licensing obligations.

However almost all APRA-regulated authorised deposit-taking
institutions, general insurers and life insurers hold AFS licenses
. It
appears that around half of APRA’s licensed superannuation trustees
also hold AFS licences.

So these jointly regulated entities are of significant size and must report to both ASIC and APRA.

Legislative amendments are proposed in the Australian Government’s
‘Streamlining Prudential Regulation: Response to ‘Rethinking
Regulation’ discussion paper
that was released for public comment on 4
December 2006. Specifically addressing the requirements
for jointly-regulated entities to report breaches to ASIC and APRA, the
discussion paper recommends:

  1. Introducing a materiality test for reporting breaches to
    APRA. The materiality test will align APRA’s requirements with the
    significance test for reporting breaches to ASIC under the Corporations
    Act 2001 (Corps Act).
  2. Aligning breach reporting periods for AFS licensees and APRA-regulated entities.
  3. Removing the requirement to report breaches of prudential
    requirements to both ASIC and APRA. APRA will collect information about
    breaches and share it with ASIC where appropriate.

Comments are due by 15 February 2007.

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