Financial Sector Legislation Amendment (Review of Prudential Decisions) Act 2008 (Cth)

Financial Sector Legislation Amendment (Review of Prudential Decisions) Act 2008 Act No. 25 of 2008 as amended This compilation was prepared on 4 March 2010 taking into account amendments up to Act No. 8 of 2010 The text of any of those amendments not in force on that date is appended in the Notes section The operation of amendments that have been incorporated may be affected by application provisions that are set out in the Notes section Prepared by the Office of Legislative Drafting and Publishing, Attorney‑General's Department, Canberra Contents 1 Short title [see Note 1] 2 Commencement 3 Schedule(s) Schedule 1—Court power of disqualification etc. Part 1—Amendments commencing on Royal Assent Banking Act 1959 Insurance Act 1973 Life Insurance Act 1995 Retirement Savings Accounts Act 1997 Superannuation Industry (Supervision) Act 1993 Part 2—Amendments contingent on the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007 Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007 Insurance Act 1973 Schedule 2—Direction powers Banking Act 1959 Insurance Act 1973 Life Insurance Act 1995 Superannuation Industry (Supervision) Act 1993 Schedule 3—Removal of Ministerial consent Part 1—Amendments commencing on Royal Assent Insurance Act 1973 Life Insurance Act 1995 Superannuation Industry (Supervision) Act 1993 Part 2—Amendments contingent on the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007 Division 1—Amendments if Schedule 2 to the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007 commences first Insurance Act 1973 Division 2—Amendments if Schedule 2 to the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007 has not yet commenced Insurance Act 1973 Division 3—Amendments once Schedule 2 to the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007 commences Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007 Insurance Act 1973 Schedule 4—Review of decisions Banking Act 1959 Financial Sector (Collection of Data) Act 2001 Insurance Act 1973 Life Insurance Act 1995 Superannuation Industry (Supervision) Act 1993 Notes An Act to amend the law relating to the financial sector, and for related purposes 1 Short title [see Note 1] This Act may be cited as the Financial Sector Legislation Amendment (Review of Prudential Decisions) Act 2008. 2 Commencement (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms. Commencement information Column 1 Column 2 Column 3 Provision(s) Commencement Date/Details 1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table The day on which this Act receives the Royal Assent. 26 May 2008 2. Schedule 1, Part 1 The day on which this Act receives the Royal Assent. 26 May 2008 3. Schedule 1, item 71 Immediately before the commencement of items 9A, 9B, 9D, 9E, 9F and 9G of Schedule 2 to the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007. 1 July 2008 However, the provision(s) do not commence at all if those items commence before the day on which this Act receives the Royal Assent. 4. Schedule 1, items 72 to 83 The later of: 1 July 2008 (paragraph (b) applies) (a) the start of the day on which this Act receives the Royal Assent; and (b) immediately after the commencement of Schedule 2 to the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007. However, the provision(s) do not commence at all if the event mentioned in paragraph (b) does not occur. 5. Schedule 2 The day on which this Act receives the Royal Assent. 26 May 2008 6. Schedule 3, Part 1 The day on which this Act receives the Royal Assent. 26 May 2008 7. Schedule 3, Part 2, Division 1 The day on which this Act receives the Royal Assent. Does not commence However, the provision(s) do not commence at all if items 8 and 13 to 33 of Schedule 2 to the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007 have not commenced before that day. 8. Schedule 3, Part 2, Division 2 The day on which this Act receives the Royal Assent. 26 May 2008 However, the provision(s) do not commence at all if items 8 and 13 to 33 of Schedule 2 to the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007 commence before that day. 9. Schedule 3, items 65 and 66 Immediately before the commencement of items 8 and 13 to 33 of Schedule 2 to the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007. 1 July 2008 However, the provision(s) do not commence at all if those items commence before the day on which this Act receives the Royal Assent. 10. Schedule 3, item 67 Immediately after the commencement of item 5 of Schedule 2 to the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007. 1 July 2008 However, the provision(s) do not commence at all if that item commences before the day on which this Act receives the Royal Assent. 11. Schedule 4 The day on which this Act receives the Royal Assent. 26 May 2008 Note: This table relates only to the provisions of this Act as originally passed by both Houses of the Parliament and assented to. It will not be expanded to deal with provisions inserted in this Act after assent. (2) Column 3 of the table contains additional information that is not part of this Act. Information in this column may be added to or edited in any published version of this Act. 3 Schedule(s) Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms. Schedule 1—Court power of disqualification etc. Part 1—Amendments commencing on Royal Assent Banking Act 1959 1 At the end of subsection 17(2) Add: ; or (c) either: (i) for a person who is a disqualified person only because he or she was disqualified under section 21—is disqualified from being or acting as an auditor of the ADI; or (ii) otherwise—is a disqualified person. 2 Subsections 19(1) and (2) Repeal the subsections, substitute: (1) A person commits an offence if: (a) the person is a disqualified person; and (b) the person is or acts as one of the following: (i) a director or senior manager of an ADI (other than a foreign ADI); (ii) a senior manager of the Australian operations of a foreign ADI; (iii) a director or senior manager of an authorised NOHC; (iv) an auditor of an ADI or an authorised NOHC; and (c) for a person who is a disqualified person only because he or she was disqualified under section 21—the person is disqualified from being or acting as that director, senior manager or auditor (as the case requires). Penalty: Imprisonment for 2 years. (2) A person commits an offence if: (a) the person is a disqualified person; and (b) the person is or acts as one of the following: (i) a director or senior manager of an ADI (other than a foreign ADI); (ii) a senior manager of the Australian operations of a foreign ADI; (iii) a director or senior manager of an authorised NOHC; (iv) an auditor of an ADI or an authorised NOHC; and (c) for a person who is a disqualified person only because he or she was disqualified under section 21—the person is disqualified from being or acting as that director, senior manager or auditor (as the case requires). Penalty: 60 penalty units. 3 Subsections 19(4) and (5) Repeal the subsections, substitute: (4) A body corporate commits an offence if: (a) a person is a disqualified person; and (b) the person is or acts as one of the following: (i) if the body corporate is an ADI (other than a foreign ADI)—a director or senior manager of the body corporate; (ii) if the body corporate is a foreign ADI—a senior manager of the Australian operations of the body corporate; (iii) if the body corporate is an authorised NOHC—a director or senior manager of the body corporate; (iv) if the body corporate is an ADI or an authorised NOHC—an auditor of the body corporate; and (c) for a person who is a disqualified person only because he or she was disqualified under section 21—the person is disqualified from being or acting as that director, senior manager or auditor (as the case requires); and (d) in any case—the body corporate allows the person to be or act as a director, senior manager or auditor (as the case requires). Penalty: 250 penalty units. (5) A body corporate commits an offence if: (a) a person is a disqualified person; and (b) the person is or acts as one of the following: (i) if the body corporate is an ADI (other than a foreign ADI)—a director or senior manager of the body corporate; (ii) if the body corporate is a foreign ADI—a senior manager of the Australian operations of the body corporate; (iii) if the body corporate is an authorised NOHC—a director or senior manager of the body corporate; (iv) if the body corporate is an ADI or an authorised NOHC—an auditor of the body corporate; and (c) for a person who is a disqualified person only because he or she was disqualified under section 21—the person is disqualified from being or acting as that director, senior manager or auditor (as the case requires); and (d) in any case—the body corporate allows the person to be or act as a director, senior manager or auditor (as the case requires). Penalty: 60 penalty units. 4 Subsection 19(7) Repeal the subsection. 5 Paragraph 20(1)(f) Omit "APRA", substitute "the Federal Court of Australia". 6 Subsection 20(1) (note) Omit "APRA", substitute "The Federal Court of Australia". 7 Sections 21 and 22 Repeal the sections, substitute: 21 Court power of disqualification (1) On application by APRA, the Federal Court of Australia may, by order, disqualify a person from being or acting as a person referred to in subsection (2), for a period that the Court considers appropriate, if the Court is satisfied that: (a) the person is not a fit and proper person to be or act as such a person; and (b) the disqualification is justified. (2) For the purposes of subsection (1), the Court may disqualify a person from being or acting as one or more of the following: (a) a director or senior manager of: (i) a particular ADI; or (ii) a class of ADIs; or (iii) any ADI; (other than a particular foreign ADI, a class of foreign ADIs or any foreign ADI); (b) a senior manager of the Australian operations of: (i) a particular foreign ADI; or (ii) a class of foreign ADIs; or (iii) any foreign ADI; (c) a director or senior manager of: (i) a particular authorised NOHC; or (ii) a class of authorised NOHCs; or (iii) any authorised NOHC; (d) an auditor of: (i) a particular ADI or a particular authorised NOHC; or (ii) a class of ADIs or a class of authorised NOHCs; or (iii) any ADI or any authorised NOHC. (3) In deciding whether it is satisfied as mentioned in paragraph (1)(a), the Court may take into account: (a) any matters specified in the regulations for the purposes of this paragraph; and (b) any criteria for fitness and propriety set out in the prudential standards; and (c) any other matters the Court considers relevant. (4) In deciding whether the disqualification is justified as mentioned in paragraph (1)(b), the Court may have regard to: (a) if the application is for the person to be disqualified from being or acting as a director or senior manager—the person's conduct in relation to the management, business or property of any corporation; and (b) if the application is for the person to be disqualified from being or acting as an auditor—the person's conduct in relation to the functions or duties of the person as required under this Act and the prudential standards; and (c) in any case—any other matters the Court considers relevant. (5) As soon as practicable after the Court disqualifies a person under this section, APRA must cause particulars of the disqualification: (a) to be given: (i) if the person is, or is acting as, a person referred to in subparagraph (2)(a)(i)—to the ADI concerned; or (ii) if the person is, or is acting as, a person referred to in subparagraph (2)(b)(i)—to the foreign ADI concerned; or (iii) if the person is, or is acting as, a person referred to in subparagraph (2)(c)(i)—to the authorised NOHC concerned; or (iv) if the person is, or is acting as, a person referred to in subparagraph (2)(d)(i)—to the ADI or authorised NOHC concerned; and (b) to be published in the Gazette. 22 Court power to revoke or vary a disqualification etc. (1) A disqualified person, or APRA, may apply to the Federal Court of Australia for: (a) if the person is a disqualified person only because he or she was disqualified under section 21—a variation or a revocation of the order made under that section; or (b) otherwise—an order that the person is not a disqualified person. (2) If the Court revokes an order under paragraph (1)(a) or makes an order under paragraph (1)(b), then, despite section 20, the person is not a disqualified person. (3) At least 21 days before commencing the proceedings, written notice of the application must be lodged: (a) if the disqualified person makes the application—by the person with APRA; or (b) if APRA makes the application—by APRA with the disqualified person. (4) An order under paragraph (1)(b) may be expressed to be subject to exceptions and conditions determined by the Court. 8 Paragraph 23(2)(a) Repeal the paragraph, substitute: (a) either: (i) for a person who is a disqualified person only because he or she was disqualified under section 21—is disqualified from being or acting as a director or senior manager of the ADI or NOHC; or (ii) otherwise—is a disqualified person; or 9 Application and transitional provisions Disqualifications (1) For the purposes of the Banking Act 1959, a disqualification by APRA that is in force under section 21 of that Act immediately before this item commences continues in force after this item commences. (2) For the purposes of the Banking Act 1959, a reference in column 1 of the table in the provision of the Banking Act 1959 (as in force immediately after this item commences) referred to in column 2 is taken to include the reference in column 3. New references to court orders to include references to disqualifications by APRA Item Column 1 Column 2 Column 3 Reference Provision of the Banking Act Reference taken to be included 1 a person who was disqualified under section 21 section 19 and paragraph 22(1)(a) a person who was disqualified under section 21 under a disqualification that is continued in force under subitem (1) 2 a person disqualified under section 21 by the Federal Court of Australia paragraph 20(1)(f) a person disqualified under section 21 by APRA under a disqualification that is continued in force under subitem (1) 3 an order made under section 21 paragraph 22(1)(a) and subsection 22(2) a disqualification made under section 21 that is continued in force under subitem (1) (3) Section 21 of the Banking Act 1959 (as in force immediately after this item commences) applies in relation to any conduct engaged in by a person, whether before or after this item commences. Waivers of disqualifications (4) If: (a) a person applies to APRA for a determination under section 22 of the Banking Act 1959 that the person is not a disqualified person; and (b) APRA has not made a decision on the application at the time this item commences; the application is taken to be withdrawn at that time. Note: See subitem (7) for the treatment of a decision by APRA under section 22 of the Banking Act 1959 in respect of which review proceedings are on foot at commencement. (5) A determination under section 22 of the Banking Act 1959 that is in force immediately before this item commences continues in force after that time. However, APRA may not revoke the determination. (6) If: (a) a determination in relation to a person continues in force under subitem (5); and (b) after this item commences, an order is made under section 21 of the Banking Act 1959 (as in force at that time) that the person is disqualified from being or acting as a person referred to in subsection 21(2) of that Act; the determination ceases to be in force. Review proceedings on foot at commencement (7) The amendments to the Banking Act 1959 made by this Schedule do not affect: (a) any request, in relation to a decision made under section 21 or 22 of that Act, for a review that is pending under section 51B of that Act immediately before the commencement of this item; or (b) any proceeding, in relation to a decision under section 21 or 22 of that Act that has been confirmed or varied under subsection 51B(3) of that Act, that is pending before the Administrative Appeals Tribunal immediately before the commencement of this item; or (c) any appeal to a court in relation to a proceeding referred to in paragraph (b). (8) If a disqualification by APRA under section 21, or a determination under section 22, of the Banking Act 1959 is confirmed or varied as a result of a request, proceeding or appeal referred to in subitem (7), the disqualification or determination is, for the purposes of subitem (1) or (5) (as the case requires), taken to have been in force immediately before this item commences. Insurance Act 1973 10 Subsections 24(1) to (7) Repeal the subsections, substitute: (1) A person commits an offence if: (a) the person is a disqualified person; and (b) the person is or acts as one of the following: (i) a director or senior manager of a general insurer (other than a foreign general insurer); (ii) a senior manager, or agent in Australia for the purpose of section 118, of a foreign general insurer; (iii) a director or senior manager of an authorised NOHC; and (c) for a person who is a disqualified person only because he or she was disqualified under section 25A—the person is disqualified from being or acting as that director, senior manager or agent in Australia (as the case requires). Penalty: Imprisonment for 2 years. (2) A person commits an offence if: (a) the person is a disqualified person; and (b) the person is or acts as one of the following: (i) a director or senior manager of a general insurer (other than a foreign general insurer); (ii) a senior manager, or agent in Australia for the purpose of section 118, of a foreign general insurer; (iii) a director or senior manager of an authorised NOHC; and (c) for a person who is a disqualified person only because he or she was disqualified under section 25A—the person is disqualified from being or acting as that director, senior manager or agent in Australia (as the case requires). Penalty: 60 penalty units. (3) Subsection (2) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. (4) A body corporate commits an offence if: (a) a person is a disqualified person; and (b) the person is or acts as one of the following: (i) if the body corporate is a general insurer (other than a foreign general insurer)—a director or senior manager of the insurer; (ii) if the body corporate is a foreign general insurer—a senior manager, or agent in Australia for the purpose of section 118, of the insurer; (iii) if the body corporate is an authorised NOHC—a director or senior manager of the NOHC; and (c) for a person who is a disqualified person only because he or she was disqualified under section 25A—the person is disqualified from being or acting as that director, senior manager or agent in Australia (as the case requires); and (d) in any case—the body corporate allows the person to be or act as a director, senior manager or agent in Australia (as the case requires). Penalty: 250 penalty units. (5) A body corporate commits an offence if: (a) a person is a disqualified person; and (b) the person is or acts as one of the following: (i) if the body corporate is a general insurer (other than a foreign general insurer)—a director or senior manager of the insurer; (ii) if the body corporate is a foreign general insurer—a senior manager, or agent in Australia for the purpose of section 118, of the insurer; (iii) if the body corporate is an authorised NOHC—a director or senior manager of the NOHC; and (c) for a person who is a disqualified person only because he or she was disqualified under section 25A—the person is disqualified from being or acting as that director, senior manager or agent in Australia (as the case requires); and (d) in any case—the body corporate allows the person to be or act as a director, senior manager or agent in Australia (as the case requires). Penalty: 60 penalty units. (6) Subsection (5) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. 11 Paragraph 25(1)(f) Omit "APRA", substitute "the Federal Court of Australia". 12 Subsection 25(1) (note) Omit "APRA", substitute "The Federal Court of Australia". 13 Sections 25A and 26 Repeal the sections, substitute: 25A Court power of disqualification (1) On application by APRA, the Federal Court of Australia may, by order, disqualify a person from being or acting as a person referred to in subsection (2), for a period that the Court considers appropriate, if the Court is satisfied that: (a) the person is not a fit and proper person to be or act as such a person; and (b) the disqualification is justified. (2) For the purposes of subsection (1), the Court may disqualify a person from being or acting as one or more of the following: (a) a director or senior manager of: (i) a particular general insurer; or (ii) a class of general insurers; or (iii) any general insurer; (other than a particular foreign general insurer, a class of foreign general insurers or any foreign general insurer); (b) a senior manager, or agent in Australia for the purpose of section 118, of: (i) a particular foreign general insurer; or (ii) a class of foreign general insurers; or (iii) any foreign general insurer; (c) a director or senior manager of: (i) a particular authorised NOHC; or (ii) a class of authorised NOHCs; or (iii) any authorised NOHC. (3) In deciding whether it is satisfied as mentioned in paragraph (1)(a), the Court may take into account: (a) any matters specified in the regulations for the purposes of this paragraph; and (b) any criteria for fitness and propriety set out in the prudential standards; and (c) any other matters the Court considers relevant. (4) In deciding whether the disqualification is justified as mentioned in paragraph (1)(b), the Court may have regard to: (a) the person's conduct in relation to the management, business or property of any corporation; and (b) any other matters the Court considers relevant. (5) As soon as practicable after the Court disqualifies a person under this section, APRA must cause particulars of the disqualification: (a) to be given: (i) if the person is, or is acting as, a person referred to in subparagraph (2)(a)(i)—to the general insurer concerned; or (ii) if the person is, or is acting as, a person referred to in subparagraph (2)(b)(i)—to the foreign general insurer concerned; or (iii) if the person is, or is acting as, a person referred to in paragraph (2)(c)(i)—to the authorised NOHC concerned; and (b) to be published in the Gazette. 26 Court power to revoke or vary a disqualification etc. (1) A disqualified person, or APRA, may apply to the Federal Court of Australia for: (a) if the person is a disqualified person only because he or she was disqualified under section 25A—a variation or a revocation of the order made under that section; or (b) otherwise—an order that the person is not a disqualified person. (2) If the Court revokes an order under paragraph (1)(a) or makes an order under paragraph (1)(b), then, despite section 25, the person is not a disqualified person. (3) At least 21 days before commencing the proceedings, written notice of the application must be lodged: (a) if the disqualified person makes the application—by the person with APRA; or (b) if APRA makes the application—by APRA with the disqualified person. (4) An order under paragraph (1)(b) may be expressed to be subject to exceptions and conditions determined by the Court. 14 Paragraph 27(2)(a) Repeal the paragraph, substitute: (a) either: (i) for a person who is a disqualified person only because he or she was disqualified under section 25A—is disqualified from being or acting as a director or senior manager of the insurer or NOHC; or (ii) otherwise—is a disqualified person; or 15 Paragraph 39(3)(b) Omit "determination", substitute "order". 16 Paragraph 43(1)(c) Repeal the paragraph, substitute: (c) the person is disqualified under section 44 from holding the appointment; or 17 Sections 44 and 45 Repeal the sections, substitute: 43A Disqualified persons must not act as auditor or actuary of general insurer (1) A person commits an offence if: (a) the person is disqualified under section 44; and (b) the person is or acts as an auditor or actuary of a general insurer; and (c) the person is disqualified from being or acting as that auditor or actuary (as the case requires). Penalty: Imprisonment for 2 years. (2) A person commits an offence if: (a) the person is disqualified under section 44; and (b) the person is or acts as an auditor or actuary of a general insurer; and (c) the person is disqualified from being or acting as that auditor or actuary (as the case requires). Penalty: 60 penalty units. (3) Subsection (2) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. (4) A body corporate commits an offence if: (a) a person is disqualified under section 44; and (b) the person is or acts as an actuary or auditor of the body corporate; and (c) the person is disqualified from being or acting as that actuary or auditor (as the case requires); and (d) the body corporate allows the person to be or act as an actuary or auditor (as the case requires). Penalty: 250 penalty units. (5) A body corporate commits an offence if: (a) a person is disqualified under section 44; and (b) the person is or acts as an actuary or auditor of the body corporate; and (c) the person is disqualified from being or acting as that actuary or auditor (as the case requires); and (d) the body corporate allows the person to be or act as an actuary or auditor (as the case requires). Penalty: 60 penalty units. (6) Subsection (5) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. (7) A failure to comply with this section does not affect the validity of an appointment or transaction. Note 1: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility. Note 2: If a body corporate is convicted of an offence against this section, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty above. 44 Court power of disqualification (1) On application by APRA, the Federal Court of Australia may, by order, disqualify a person from holding any appointment as a person referred to in subsection (2), for a period that the Court considers appropriate, if the Court is satisfied that: (a) any of the following applies: (i) the person has failed to perform adequately and properly the functions and duties of such an appointment under this Act or the prudential standards; (ii) the person otherwise does not meet one or more of the criteria for fitness and propriety set out in the prudential standards; (iii) the person does not meet the eligibility criteria for such an appointment as set out in the