Upcoming Mallesons seminarsADIs, general insurers, life insurers, superannuation entities, and non-operating holding companies of life insurers
What do you need to do?Consider the likely impact of the proposals on your business once the Bill has been introduced
John Edstein
Partner
T +61 2 9296 2129
Michelle Levy
Partner
T +61 2 9296 2437
Sydney
Melbourne
John Malon
Today the Assistant Treasurer and the Minister for Superannuation and Corporate Law announced that the Government proposes to introduce a Bill to regulate the non-operating holding companies (NOHCs) of life companies.
It is also proposed that the Bill, to be known as the Financial Sector Legislation (Enhancing Supervision and Enforcement) Bill 2009, will include provisions designed to improve the Federal Court of Australia’s ability to issue injunctions, on application by the Australian Prudential Regulation Authority (APRA), in respect of prudential matters.
The Government has flagged the reforms as a response to the current economic crisis and a gap in the existing prudential regulation system (as APRA currently regulates the NOHCs of Authorised Deposit-Taking Institutions [ADIs] and general insurers). The joint press release states that the Government is “ensuring that APRA has access to full information about the financial entities it regulates and can respond quickly and decisively to prudential concerns.”
The Government has stated that APRA will be given powers to:
- register and supervise the NOHCs of life insurance companies
- enforce their compliance with prudential requirements, and
- seek a “comprehensive range of injunctions from the Federal Court of Australia on prudential matters, and this power will apply to ADIs, general insurance, life insurance and superannuation”.
Once the Bill is introduced, it will be important for NOHCs of life companies to assess the impact of the proposals on their business. They will also need to consider the need, if any, to change internal policies and procedures as they relate to a life company within the corporate group.
Finally, it seems that the Government is keen to bolster APRA’s ability to seek injunctive relief on prudential matters affecting ADIs, general insurers, life insurers and superannuation entities. At this stage, it is unclear what the so-called “comprehensive range of injunctions” will actually entail. A further alert summarising the details of the proposed legislation will be issued once the Bill has been introduced into Parliament. We understand that the Bill is planned for introduction in the last week of the Autumn sittings in May 2009.