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APRA releases revised proposals for Financial Claims Scheme

Monday 30 August 2010

 

The Australian Prudential Regulation Authority (APRA) has today released a response paper and draft reporting standard in the second round of consultation on the implementation of the Financial Claims Scheme (FCS) for authorised deposit-taking institutions (ADIs).

The FCS was established in October 2008 and is designed to protect depositors up to a defined amount, and to provide them with timely access to their deposits, in the event that their ADI becomes insolvent and is placed into liquidation. The response paper provides comments on key issues raised in submissions to APRA's discussion paper on the FCS released in January this year. APRA has made some modifications to the original proposals in response to certain concerns raised by industry. These include:

  • extending the period for providing FCS-related data to APRA from 48 hours to 72 hours of a request being made for the data;
  • requiring a reasonable assurance audit initially and every three years thereafter, rather than every year as proposed earlier, with limited assurance reviews in the intervening years;
  • no requirement for ADIs to include accrued interest, fees and charges in their reporting of deposit data for FCS testing purposes; and
  • providing a transition period of at least 12 months (extendable for up to a further 24 months on a case-by-case basis) before the FCS reporting obligations take effect.

Once the reporting standard comes into force, and after the relevant transition period, ADIs will be required to report FCS-related data in a prescribed format to APRA within a short period of being requested to do so. ADIs will be tested periodically on their ability to do this.

Submissions on the response paper and reporting standard are due by 15 October 2010. Subject to industry feedback, APRA will release the final reporting standard in late 2010, to take effect from 1 April 2011.

The consultation package can be found on the APRA website.

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, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding $6 trillion in assets for Australian depositors, policyholders and superannuation fund members.