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.