Explanatory Memorandum(Circulated by authority of the Minister for Financial Services and Regulation, the Honourable J.B. Hockey, MP)
1 - Outline
1.1 This Bill continues the legislation to implement the Governments response to the recommendations of the Financial System Inquiry as announced by the Treasurer, the Hon. Peter Costello, M.P., in the House of Representatives on 2 September 1997.
1.2 The Final Report of the Inquiry and the Governments response to it are directed to the fundamental goals of the Government, to increase competition and improve efficiency, while preserving the integrity, security and fairness of the financial system.
1.3 The performance of the financial system, and the cost effectiveness of its regulation, are critical to the efficient functioning of the Australian economy.
1.4 The first stage of the reforms introduced a new organisational framework for the regulation of the financial system from 1 July 1998, and a variety of measures to improve efficiency and contestability in financial markets and the payments system. The second stage of reforms covered the transfer of regulatory responsibility for building societies, credit unions and friendly societies from the States and Territories to the Commonwealth.
1.5 The third stage continues this reform process and enhances the operation of existing financial sector legislation. Specifically, the Financial Sector Reform (Amendments and Transitional Provisions) Bill (No. 2) contains key measures designed to:
- clarify the availability of financial assistance to superannuation funds in the circumstances of fraud which will overcome deficiencies in the operation of the superannuation fraud provisions;
- extend the time period for qualification for tax relief for foreign authorised deposit-taking institutions (ADIs) transferring assets and liabilities between branches, ADI subsidiaries and money market corporations;
- allow the electronic lodgement of information by superannuation funds in accordance with the Governments wider objective of establishing a business entry point;
- reduce compliance costs on business, increase flexibility and remove unused provisions of the Financial Corporations Act 1974 (FCA); and
- provide a mechanism, in response to concerns raised by industry, to ensure adequate disclosure to members prior to an ADI affecting a demutualisation.
1.6 It is not envisaged that the Bill will have a financial impact on the operations of Government. The Office of Regulation Review has advised that a Regulation Impact Statement is not required for this Bill as it is of a minor or government machinery nature and does not substantially alter existing arrangements.