The Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2017 has been passed by both houses of Parliament and is awaiting Royal Assent. Background.
UPDATE: Royal Assent given on 5 March 2018.
The Bill provides:
- powers that enable APRA to set requirements on resolution planning and ensure banks and insurers are better prepared for a crisis; and
- an expanded set of crisis resolution powers that equip APRA to act decisively to facilitate the orderly resolution of a distressed bank or insurer.
The Bill amends the following eight Acts:
• Banking Act 1959;
• Insurance Act 1973;
• Life Insurance Act 1995 (Life Insurance Act);
• Australian Prudential Regulation Authority Act 1998;
• Payment Systems and Netting Act 1998;
• Financial Sector (Business Transfer and Group Restructure) Act 1999 (Transfer Act);
• Corporations Act 2001; and
• Income Tax Assessment 1997.
The amendments in relation to crisis resolution:
• enhance APRA’s statutory and judicial management regimes to ensure their effective operation in a crisis;
• enhance the scope and efficacy of APRA’s existing directions powers;
• improve APRA’s ability to implement a transfer under the Transfer Act;
• ensure the effective conversion and write-off of capital instruments to which the conversion and write-off provisions in APRA’s prudential standards apply;
• enhance stay provisions and ensure that the exercise of APRA’s powers does not trigger certain rights in the contracts of relevant entities within the same group;
• enhance APRA’s ability to respond when an Australian branch of a foreign regulated entity (foreign branch) may be in distress;
• enhance the efficiency and operation of the Financial Claims Scheme and ensure that it supports the crisis resolution framework; and
• enhance and simplify APRA’s powers in relation to the wind-up or external administration of regulated entities.
