Explanatory Memorandum(Circulated by the authority of the Parliamentary Secretary to the Treasurer, the Hon Chris Pearce MP)
This Bill implements legislative amendments to the Australian Prudential Regulation Authority Act 1998 , the Banking Act 1959 and the Financial Sector (Transfers of Business) Act 1999 , to promote a joint approach to trans-Tasman banking supervision, as a step towards a seamless regulatory environment for banking services in Australia and New Zealand. Legislation is being introduced in New Zealand, to amend the Reserve Bank of New Zealand Act 1989, that mirrors the amendments in this Bill.
Given the interdependence of Australia's and New Zealand's financial systems, it is important that both countries' banking supervisors, the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of New Zealand (RBNZ), can support each other in the performance of their regulatory responsibilities and, through this process, reduce any impediments to banks choosing the location of their systems and functions within the trans-Tasman market.
This Bill requires APRA to support the RBNZ in the performance of its statutory responsibilities and, to the extent reasonably practicable, avoid any actions that are likely to have a detrimental effect on financial system stability in New Zealand. It also requires APRA to consider the implications of its actions for financial system stability in New Zealand and consult the RBNZ where practicable on this matter. An administrator or statutory manager - that may be appointed by APRA to a bank in severe financial distress - is also required to consider the implications of a proposed action on financial system stability in New Zealand.
This Bill clarifies that APRA can second staff from the RBNZ.
This Bill also clarifies that one of APRA's objectives is to promote financial system stability in Australia.
This Bill should not have a financial impact for the Commonwealth because APRA is self-funded through financial sector levies.