The Australian Prudential Regulation Authority (APRA) today released a discussion paper on proposals for the collection of data from discretionary mutual funds (DMFs). This follows the Government’s announcement on 3 May 2007 ‘Enhancing the Integrity of Insurance in Australia’.
DMFs are entities that offer ‘discretionary cover’, that is, an insurance-like product that may involve an obligation on the DMF to consider meeting a claim made on it, but gives the DMF a discretion as to whether it will pay the claim. A DMF may be a trust, mutual, company limited by guarantee or other structure. Because of their discretionary nature, DMFs are not insurance companies and therefore are not required to be authorised by APRA.
The Government’s announcement[1] foreshadowed that DMFs would not be subject to prudential regulation but that they would be required to provide data to APRA under the Financial Sector (Collection of Data) Act 2001.
APRA’s discussion paper includes draft forms and instructions. It sets out proposed data collection arrangements and invites submissions on these as well as the forms and instructions. APRA considers that the proposed level of reporting will provide the data necessary to assist the Government to assess the need to prudentially regulate DMFs.
APRA Member John Trowbridge said: “APRA has developed the reporting proposals recognising that DMFs do not have the same reporting infrastructure or business models as APRA-authorised insurers. APRA has undertaken informal consultation with some of the major players in the industry to assist in the development of the DMF reporting framework that is proposed in this paper. The outcome is that DMFs will need to provide significantly less detailed reporting compared to APRA-authorised insurers.”
Submissions on the discussion paper and reporting requirements are invited by Friday 2 November 2007 and can be emailed to DMF_reporting@apra.gov.au.
The discussion paper, forms and instructions (http://www.apra.gov.au/RFC/DMFs.cfm) are located on the APRA website at www.apra.gov.au.
[1] http://assistant.treasurer.gov.au/pcd/content/pressreleases/2007/042.asp
The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. APRA is funded largely by the industries that it supervises. It was established on 1 July 1998. APRA currently supervises institutions holding approximately $2.5 trillion in assets for 20 million Australian depositors, policyholders and superannuation fund members.
Media and industry inquiries only:
Stuart Snell, Head of Public Affairs
Australian Prudential Regulation Authority
Telephone: 02 9210 3384
Mobile: 0407 250 276
All other inquiries:
APRA Contact Centre 1300 131 060
