FINANCIAL SECTOR REFORM (HAYNE ROYAL COMMISSION RESPONSE NO. 3) BILL 2021

2019-2020-2021

The Parliament of the

Commonwealth of Australia

HOUSE OF REPRESENTATIVES

Presented and read a first time

Financial Sector Reform (Hayne Royal

Commission Response No. 3) Bill 2021

No. , 2021

(Treasury)

A Bill for an Act to deal with consequential

amendments and transitional matters arising from

the enactment of the Financial Accountability

Regime Act 2021 and to establish the financial

services compensation scheme of last resort, and for

related purposes

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

Contents

Short title ........................................................................................... 1

Commencement ................................................................................. 2

Schedules ........................................................................................... 3

Schedule 1--Consequential amendments

Part 1--Amendments for the start of the financial

accountability regime

Australian Prudential Regulation Authority Act 1998

Australian Securities and Investments Commission Act 2001

Banking Act 1959

Corporations Act 2001

Financial Regulator Assessment Authority Act 2021

Financial Sector (Transfer and Restructure) Act 1999

Insurance Act 1973

Life Insurance Act 1995

National Consumer Credit Protection Act 2009

Payment Systems and Netting Act 1998

Private Health Insurance (Prudential Supervision) Act 2015

Superannuation Industry (Supervision) Act 1993

Part 2--Amendments for the end of the banking executive

accountability regime

Australian Prudential Regulation Authority Act 1998

Banking Act 1959

Schedule 2--Application, saving and transitional provisions

Part 1--Preliminary

Part 2--Banking sector

Division 1--Key personnel obligations

Division 2--Deferred remuneration obligations

Division 3--Notification obligations

Division 4--Regulatory powers and enforcement

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

Part 3--Other sectors

Division 1--Key personnel obligations

Division 2--Deferred remuneration obligations

Division 3--Insurance

Division 4--Life insurance

Division 5--Private health insurance

Division 6--Superannuation

Part 4--APRA and ASIC

Division 1--Transition from the BEAR

Division 2--Application of the FAR

Part 5--Transitional rules

Schedule 3--Financial services compensation scheme of last

resort

Part 1--Main amendments

Corporations Act 2001

Part 2--Other amendments

Australian Securities and Investments Commission Act 2001

Corporations Act 2001

National Consumer Credit Protection Act 2009

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

A Bill for an Act to deal with consequential

amendments and transitional matters arising from

the enactment of the Financial Accountability

Regime Act 2021 and to establish the financial

services compensation scheme of last resort, and for

related purposes

The Parliament of Australia enacts:

1 Short title

This Act is the

Financial Sector Reform (Hayne Royal Commission

Response No. 3) Act 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

2 Commencement

(1) Each provision of this Act specified in column 1 of the table

commences, or is taken to have commenced, in accordance with

column 2 of the table. Any other statement in column 2 has effect

according to its terms.

Commencement information

Column 1

Column 2

Column 3

Provisions

Commencement

Date/Details

1. Sections 1 to 3

and anything in

this Act not

elsewhere covered

by this table

The day after this Act receives the Royal

Assent.

2. Schedule 1,

Part 1

At the same time as the

Financial

Accountability Regime Act 2021

commences.

However, the provisions do not commence

at all if that Act does not commence.

3. Schedule 1,

Part 2

The later of:

(a) 1 July 2022; and

(b) the day that is 6 months after the

Financial Accountability Regime Act 2021

commences.

However, the provisions do not commence

at all if the event mentioned in paragraph (b)

does not occur.

4. Schedule 2

At the same time as the

Financial

Accountability Regime Act 2021

commences.

However, the provisions do not commence

at all if that Act does not commence.

5. Schedule 3

At the same time as the

Financial Services

Compensation Scheme of Last Resort Levy

Act 2021

commences.

However, the provisions do not commence

at all if that Act does not commence.

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

Note:

This table relates only to the provisions of this Act as originally

enacted. It will not be amended to deal with any later amendments of

this Act.

(2) Any information in column 3 of the table is not part of this Act.

Information may be inserted in this column, or information in it

may be edited, in any published version of this Act.

3 Schedules

Legislation that is specified in a Schedule to this Act is amended or

repealed as set out in the applicable items in the Schedule

concerned, and any other item in a Schedule to this Act has effect

according to its terms.

Schedule 1

Consequential amendments

Part 1

Amendments for the start of the financial accountability regime

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

Schedule 1--Consequential amendments

Part 1--Amendments for the start of the financial

accountability regime

Australian Prudential Regulation Authority Act 1998

1 Subsection 3(1) (after paragraph (b) of the definition of

prudential regulation framework law)

Insert:

(ba) the

Financial Accountability Regime Act 2021

;

(bb) Schedules 1 and 2 to the

Financial Sector Reform (Hayne

Royal Commission Response No. 3) Act 2021

;

2 Section 48

Omit "Under", substitute "(1) Under".

3 At the end of section 48

Add:

(2) Subsection (1) does not apply to an appointment made under, or for

the purposes of, the

Financial Accountability Regime Act 2021

4 Paragraph 53(1)(d)

Repeal the paragraph, substitute:

(d) amounts of any fees, charges or penalties paid to APRA, on

behalf of the Commonwealth, under section 51 or any other

law of the Commonwealth except the following:

(i) Part 3A of the

Financial Institutions Supervisory Levies

Collection Act 1998

;

(ii) the

Financial Accountability Regime Act 2021

;

5 Subsection 56(1) (after paragraph (cb) of the definition of

protected document)

Insert:

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Part 1

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

; or (cc) a person in relation to whom information is, or was, required

to be given under the

Financial Accountability Regime Act

2021

;

6 Subsection 56(1) (after paragraph (d) of the definition of

protected document)

Insert:

(da) a document given or produced to ASIC under, or for the

purposes of, a provision of the

Financial Accountability

Regime Act 2021

, other than a document given or produced

to ASIC by APRA; or

7 Subsection 56(1) (after paragraph (cb) of the definition of

protected information)

Insert:

; or (cc) a person in relation to whom information is, or was, required

to be given under the

Financial Accountability Regime Act

2021

;

8 Subsection 56(1) (after paragraph (d) of the definition of

protected information)

Insert:

(da) information given or produced to ASIC under, or for the

purposes of, a provision of the

Financial Accountability

Regime Act 2021

, other than information given or produced

to ASIC by APRA; or

9 Paragraph 56(2)(c)

Omit "or (7F)", substitute ", (7F), (7G), (7H), (7J), (7K) or (7L)".

10 After subsection 56(7F)

Insert:

(7G) It is not an offence if:

(a) the disclosure of protected information or the production of a

protected document is to an accountable entity (within the

meaning of the

Financial Accountability Regime Act 2021

);

and

Schedule 1

Consequential amendments

Part 1

Amendments for the start of the financial accountability regime

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

(b) the information, or the information contained in the

document, as the case may be, is information contained in the

Financial Accountability

Regime Act 2021

Note:

A defendant bears an evidential burden in relation to the matters in

subsection (7G) (see subsection 13.3(3) of the

Criminal Code

(7H) It is not an offence if:

(a) the disclosure of protected information or the production of a

protected document is to an individual; and

(b) the information, or the information contained in the

document, as the case may be, is only personal information

about the individual; and

document, as the case may be, is information contained in the

Financial Accountability

Regime Act 2021

Note:

A defendant bears an evidential burden in relation to the matters in

subsection (7H) (see subsection 13.3(3) of the

Criminal Code

(7J) It is not an offence if:

(a) the disclosure of protected information or the production of a

protected document is by APRA; and

(b) the information, or the information contained in the

document, as the case may be, is information that discloses:

(i) whether a person is disqualified under section 42 of the

Financial Accountability Regime Act 2021

; or

(ii) a decision made under Division 2 of Part 3 of Chapter 3

of that Act (which is about disqualification of

accountable persons), or the reasons for such a decision.

Note:

A defendant bears an evidential burden in relation to the matters in

subsection (7J) (see subsection 13.3(3) of the

Criminal Code)

(7K) It is not an offence if the disclosure of protected information or the

production of a protected document by a person is in accordance

with section 39 of the

Financial Accountability Regime Act 2021

Note:

A defendant bears an evidential burden in relation to the matters in

subsection (7K) (see subsection 13.3(3) of the

Criminal Code

(7L) It is not an offence if:

Consequential amendments

Schedule 1

Amendments for the start of the financial accountability regime

Part 1

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

(a) the disclosure of protected information or the production of a

protected document is by ASIC, for the purposes of the

performance of ASIC's functions, or the exercise of ASIC's

powers; and

(b) the protected information was disclosed previously to ASIC,

or the protected document was produced previously to ASIC,

in accordance with section 39 of the

Financial Accountability

Regime Act 2021

Note:

A defendant bears an evidential burden in relation to the matters in

subsection (7L) (see subsection 13.3(3) of the

Criminal Code

11 Paragraph 56(12)(a)

Omit "and (7F)", substitute ", (7F), (7G), (7H), (7J), (7K) and (7L)".

12 At the end of subsection 58(4)

Add:

; (d) section 101 or 102 of the

Financial Accountability Regime

Act 2021

13 After paragraph 59(2)(ba)

Insert:

(bb) information about investigations (including joint

investigations) conducted by APRA under Division 1 of

Part 4 of Chapter 3 of the

Financial Accountability Regime

Act 2021

during the period;

14 After subsection 59(3)

Insert:

(4) Paragraph (2)(bb) does not authorise the inclusion in the annual

report of information with respect to the affairs of a particular

person.

Australian Securities and Investments Commission Act 2001

15 Subsection 12A(1)

Omit "Acts".

Schedule 1

Consequential amendments

Part 1

Amendments for the start of the financial accountability regime

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

16 At the end of subsection 12A(1)

Add:

(m) the

Financial Accountability Regime Act 2021

;

(n) Schedules 1 and 2 to the

Financial Sector Reform (Hayne

Royal Commission Response No. 3) Act 2021

17 After subsection 127(6)

Insert:

(7) A person (the

officer

) commits an offence if:

(a) the officer is or has been:

(i) a member of ASIC; or

(ii) a staff member; or

(iii) a Commonwealth officer within the meaning of the

Crimes Act 1914

; and

(b) the officer intentionally or recklessly, and directly or

indirectly:

(i) discloses information to any person or to a court; or

(ii) produces a document to any person or to a court; and

information disclosed to, or obtained by, ASIC for the

purposes of a function (a

FAR-related function

) conferred

on ASIC by:

(i) the

Financial Accountability Regime Act 2021

; or

(ii) Schedule 1 or 2 to the

Financial Sector Reform (Hayne

Royal Commission Response No. 3) Act 2021

; and

(d) if subparagraph (b)(ii) applies--the document:

(i) is protected information and was given or produced to

ASIC for the purposes of a FAR-related function; or

(ii) contains protected information disclosed to, or obtained

by, ASIC for the purposes of a FAR-related function;

and

(e) the officer acquired the information, or has or had access to

the document, as the case may be, in the course of the

officer's duties as a member of ASIC, a staff member or a

Commonwealth officer within the meaning of the

Crimes Act

1914

Consequential amendments

Schedule 1

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Part 1

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

Penalty: Imprisonment for 2 years.

(7A) Subsection (7) does not apply if the disclosure or production

constitutes authorised disclosure of the protected information for

the purposes of subsection (1).

Note:

A defendant bears an evidential burden in relation to the matter in this

subsection (see subsection 13.3(3) of the

Criminal Code

(8) A document is an exempt document for the purposes of section 38

of the

Freedom of Information Act 1982

if the document:

(a) is protected information and was given or produced to ASIC;

(b) contains protected information disclosed to, or obtained by,

ASIC;

for the purposes of a function conferred on ASIC by:

Financial Accountability Regime Act 2021

; or

(d) Schedule 1 or 2 to the

Financial Sector Reform (Hayne Royal

Commission Response No. 3) Act 2021

18 After paragraph 136(1)(d)

Insert:

(da) information about investigations (including joint

investigations) conducted by ASIC under Division 1 of Part 4

of Chapter 3 of the

Financial Accountability Regime Act

2021

during the period;

19 After subsection 136(2A)

Insert:

(3) Paragraph (1)(da) does not authorise the inclusion in the annual

report of information with respect to the affairs of a particular

person.

20 In the appropriate position

Insert:

Schedule 1

Consequential amendments

Part 1

Amendments for the start of the financial accountability regime

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

Part 37--Transitional provisions relating to the

Financial Sector Reform (Hayne Royal

Commission Response No. 3) Act 2021

337 Application--confidentiality

The amendment of section 12A made by Part 1 of Schedule 1 to

the

Financial Sector Reform (Hayne Royal Commission Response

No. 3) Act 2021

, so far as it relates to the definition of protected

information in subsection 127(9) of this Act, applies in relation to

any use or disclosure of information after the commencement of

that Part, whether ASIC obtained the information before or after

that commencement.

338 Information to be included in ASIC's annual report

The amendment of section 136 made by Part 1 of Schedule 1 to the

Financial Sector Reform (Hayne Royal Commission Response No.

3) Act 2021

applies to reports on ASIC's investigations during the

financial year ending on 30 June 2023, and later financial years.

Banking Act 1959

21 After subparagraph 9A(2)(b)(ii)

Insert:

(iia) a requirement of the

Financial Accountability Regime

Act 2021

;

22 After subparagraph 11AB(2)(a)(ii)

Insert:

(iia) a requirement of the

Financial Accountability Regime

Act 2021

;

23 Paragraph 15D(1)(a)

After "the

Financial Sector (Collection of Data) Act 2001

", insert "or

the

Financial Accountability Regime Act 2021

Consequential amendments

Schedule 1

Amendments for the start of the financial accountability regime

Part 1

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

24 Paragraph 15D(1)(b)

Omit "that Act", substitute "those Acts".

25 Subsection 16B(1)

After "functions under this Act", insert "or the

Financial Accountability

Regime Act 2021

26 Subparagraph 16BA(6)(a)(i)

Omit "the regulations or the

Financial Sector (Collection of Data) Act

2001

", substitute "the regulations, the

Financial Sector (Collection of

Data) Act 2001

or the

Financial Accountability Regime Act 2021

27 Section 16C

Omit "this Act or the

Financial Sector (Collection of Data) Act 2001

substitute "this Act, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

28 Paragraph 17(2)(a)

Omit "this Act or the prudential standards", substitute "this Act, the

prudential standards or the

Financial Accountability Regime Act 2021

29 After subparagraph 20(1)(a)(ii)

Insert:

(iia) the

Financial Accountability Regime Act 2021

; or

30 Section 69BA

Omit "this Act or the

Financial Sector (Collection of Data) Act 2001

substitute "this Act, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

Corporations Act 2001

31 After subparagraph 1317AA(5)(c)(iii)

Insert:

(iiia) the

Financial Accountability Regime Act 2021

;

Schedule 1

Consequential amendments

Part 1

Amendments for the start of the financial accountability regime

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

Financial Regulator Assessment Authority Act 2021

32 Subparagraph 40(3)(a)(iv)

Omit "or".

33 At the end of paragraph 40(3)(a)

Add:

(v) subsection 72(1) or section 73 of the

Financial

Accountability Regime Act 2021

; or

Financial Sector (Transfer and Restructure) Act 1999

34 At the end of paragraph 36B(1A)(a)

Add:

(iv) section 64 of the

Financial Accountability Regime Act

2021

;

Insurance Act 1973

35 After subparagraph 15(1)(a)(ii)

Insert:

(iiaa) a requirement of the

Financial Accountability Regime

Act 2021

; or

36 After subparagraph 21(1)(a)(ii)

Insert:

(iiaa) a requirement of the

Financial Accountability Regime

Act 2021

; or

37 After subparagraph 25(1)(a)(ii)

Insert:

(iia) the

Financial Accountability Regime Act 2021

; or

38 After paragraph 43(2)(a)

Insert:

(aa) has failed to comply with a requirement of the

Financial

Accountability Regime Act 2021

; or

Consequential amendments

Schedule 1

Amendments for the start of the financial accountability regime

Part 1

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

39 After subparagraph 44(1)(a)(i)

Insert:

(ia) the person has failed to comply with a requirement of

the

Financial Accountability Regime Act 2021

;

40 Paragraph 44(4)(a)

Omit "this Act and the prudential standards", substitute "this Act, the

prudential standards and the

Financial Accountability Regime Act

2021

41 After subparagraphs 48(1)(a)(i) and (2)(a)(i)

Insert:

(ia) the

Financial Accountability Regime Act 2021

; or

42 Subsection 49(1)

After "functions under this Act", insert "or the

Financial Accountability

Regime Act 2021

43 Subparagraph 49A(6)(a)(iv)

Omit "this Act or a requirement under the

Financial Sector (Collection

of Data) Act 2001

", substitute "this Act, a requirement under the

Financial Sector (Collection of Data) Act 2001

or a requirement of the

Financial Accountability Regime Act 2021

44 Section 49B

Omit "this Act or the

Financial Sector (Collection of Data) Act 2001

substitute "this Act, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

45 After subparagraph 62M(1)(a)(iv)

Insert:

(ivaa) the general insurer has failed to comply with a

requirement of the

Financial Accountability Regime Act

2021

; or

46 Subsection 62W(1)

Repeal the subsection, substitute:

Schedule 1

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Part 1

Amendments for the start of the financial accountability regime

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

(1) None of the matters mentioned in subsection (2) affect:

(a) the continued operation of other Parts of this Act in relation

to a general insurer; or

(b) the operation of the

Financial Sector (Collection of Data) Act

2001

or the

Financial Accountability Regime Act 2021

relation to a general insurer; or

Parts and those Acts.

47 Subsection 62ZOY(1)

Repeal the subsection, substitute:

(1) None of the matters mentioned in subsection (2) affect:

(a) the continued operation of other provisions of this Act in

relation to a body corporate; or

(b) the operation of the

Financial Sector (Collection of Data) Act

2001

or the

Financial Accountability Regime Act 2021

relation to a body corporate; or

provisions and those Acts.

48 Section 129AA

Omit "this Act or the

Financial Sector (Collection of Data) Act 2001

substitute "this Act, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

Life Insurance Act 1995

49 Paragraph 21(3)(e)

Omit "this Act or the

Financial Sector (Collection of Data) Act 2001

substitute "this Act, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

50 After subparagraph 26(1)(a)(ii)

Insert:

(iia) a requirement of the

Financial Accountability Regime

Act 2021

; or

Consequential amendments

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Part 1

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

51 After subparagraph 28C(1)(a)(ii)

Insert:

(iiaa) a requirement of the

Financial Accountability Regime

Act 2021

; or

52 After paragraph 85(1)(b)

Insert:

(ba) the person has failed to comply with a requirement of the

Financial Accountability Regime Act 2021

; or

53 Paragraph 88(1)(a)

Omit "this Act or the

Financial Sector (Collection of Data) Act 2001

substitute "this Act, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

54 Subparagraph 88(3)(a)(i)

Omit "this Act or the

Financial Sector (Collection of Data) Act 2001

substitute "this Act, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

55 Section 88A

Omit "this Act or under the

Financial Sector (Collection of Data) Act

2001

", substitute "this Act, the

Financial Sector (Collection of Data)

Act 2001

or the

Financial Accountability Regime Act 2021

56 Subsection 88B(1)

Omit "this Act or the

Financial Sector (Collection of Data) Act 2001

substitute "this Act, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

57 Paragraph 89(2)(a)

Omit "this Act or the

Financial Sector (Collection of Data) Act 2001

substitute "this Act, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

58 After paragraph 94(1)(b)

Insert:

Schedule 1

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Part 1

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Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

(ba) the person has failed to comply with a requirement of the

Financial Accountability Regime Act 2021

; or

59 Paragraph 98(1)(a)

Omit "this Act or the

Financial Sector (Collection of Data) Act 2001

substitute "this Act, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

60 Subparagraph 98(3)(a)(i)

Omit "this Act or the

Financial Sector (Collection of Data) Act 2001

substitute "this Act, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

61 Section 98A

Omit "this Act or under the

Financial Sector (Collection of Data) Act

2001

", substitute "this Act, the

Financial Sector (Collection of Data)

Act 2001

or the

Financial Accountability Regime Act 2021

62 Subsection 98B(1)

Omit "this Act or the

Financial Sector (Collection of Data) Act 2001

substitute "this Act, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

63 Paragraph 99(2)(a)

After "this Act", insert "or the

Financial Accountability Regime Act

2021

64 Paragraph 125A(2)(c)

Omit "the regulations or the

Financial Sector (Collection of Data) Act

2001

", substitute "the regulations, the

Financial Sector (Collection of

Data) Act 2001

or the

Financial Accountability Regime Act 2021

65 Subsection 166(1)

Repeal the subsection, substitute:

(1) None of the matters mentioned in subsection (2) affect:

(a) the continued operation of other Parts of this Act in relation

to a life company; or

Consequential amendments

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Part 1

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Bill 2021

(b) the operation of the

Financial Sector (Collection of Data)

Act 2001

or the

Financial Accountability Regime Act 2021

relation to a life company; or

Parts and those Acts.

66 Subsection 179AY(1)

Repeal the subsection, substitute:

(1) None of the matters mentioned in subsection (2) affect:

(a) the continued operation of other provisions of this Act in

relation to a body corporate; or

(b) the operation of the

Financial Sector (Collection of Data) Act

2001

or the

Financial Accountability Regime Act 2021

relation to a body corporate; or

provisions and those Acts.

67 Paragraph 245(1)(a)

Omit "this Act or the

Life Insurance Act 1945

", substitute "this Act, the

repealed

Life Insurance Act 1945

or the

Financial Accountability

Regime Act 2021

68 Subsection 248(2)

Omit "this Act or the

Financial Sector (Collection of Data) Act 2001

substitute "this Act, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

National Consumer Credit Protection Act 2009

69 Subsection 5(1) (definition of large ADI)

Omit "has the same meaning as in the

Banking Act 1959

", substitute

"means an ADI of a kind determined under subsection (1A)".

70 After subsection 5(1)

Insert:

(1A) The Minister may, by legislative instrument, determine the kinds of

ADIs that are large ADIs.

Schedule 1

Consequential amendments

Part 1

Amendments for the start of the financial accountability regime

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

Payment Systems and Netting Act 1998

71 Section 5 (after paragraph (b) of the definition of direction

stay provision)

Insert:

(baa) subsection 77(2) of the

Financial Accountability Regime Act

2021

;

72 Section 5 (before paragraph (fc) of the definition of

specified provisions)

Insert:

(fca) subsections 77(3) and (4) of the

Financial Accountability

Regime Act 2021

;

73 Section 5 (after paragraph (e) of the definition of specified

stay provision)

Insert:

(eaa) subsection 77(2) of the

Financial Accountability Regime Act

2021

;

Private Health Insurance (Prudential Supervision) Act 2015

74 After subsection 21(1)

Insert:

(1A) APRA may, in writing, cancel the registration of a private health

insurer if APRA is satisfied that the private health insurer has

failed to comply with a requirement of the

Financial

Accountability Regime Act 2021

75 Subsections 84(1) and (2)

Omit "or of the

Private Health Insurance Act 2007

", substitute "the

Private Health Insurance Act 2007

or the

Financial Accountability

Regime Act 2021

76 After paragraph 107(2)(c)

Insert:

; and (d) the

Financial Accountability Regime Act 2021

Consequential amendments

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77 Subsection 107(2) (note 2)

Omit "paragraphs (b) and (c)", substitute "paragraphs (b), (c) and (d)".

78 Paragraph 110(1)(a)

Omit "the

Private Health Insurance Act 2007

or the

Financial Sector

(Collection of Data) Act 2001

", substitute "the

Private Health

Insurance Act 2007

, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

79 Subparagraph 110(5)(a)(i)

Omit "the

Private Health Insurance Act 2007

or the

Financial Sector

(Collection of Data) Act 2001

", substitute "the

Private Health

Insurance Act 2007

, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

80 Subsections 111(1) and 112(1)

Omit "the

Private Health Insurance Act 2007

or the

Financial Sector

(Collection of Data) Act 2001

", substitute "the

Private Health

Insurance Act 2007

, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

81 Paragraph 113(2)(a)

Omit "the

Private Health Insurance Act 2007

or the

Financial Sector

(Collection of Data) Act 2001

", substitute "the

Private Health

Insurance Act 2007

, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

82 After subparagraphs 119(1)(a)(iii) and 120(4)(b)(iii)

Insert:

(iiia) the

Financial Accountability Regime Act 2021

; or

83 Subsection 168(1) (after table item 3)

Insert:

to cancel the registration of a private health

insurer

subsection 21(1A)

Schedule 1

Consequential amendments

Part 1

Amendments for the start of the financial accountability regime

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

Superannuation Industry (Supervision) Act 1993

84 Subsection 10(1) (after paragraph (c) of the definition of

RSE licensee law)

Insert:

(ca) the

Financial Accountability Regime Act 2021

; and

85 Section 38A (before paragraph (ab) of the definition of

regulatory provision)

Insert:

(aba) a provision of the

Financial Accountability Regime Act 2021

;

86 Paragraph 126H(3)(a)

Omit "this Act or the

Financial Sector (Collection of Data) Act 2001

substitute "this Act, the

Financial Sector (Collection of Data) Act 2001

or the

Financial Accountability Regime Act 2021

87 Subparagraph 129(1)(a)(ii)

After "

Financial Sector (Collection of Data) Act 2001

", insert "or the

Financial Accountability Regime Act 2021

88 Section 130A

Omit "the prudential standards or the

Financial Sector (Collection of

Data) Act 2001

", substitute "the prudential standards, the

Financial

Sector (Collection of Data) Act 2001

or the

Financial Accountability

Regime Act 2021

89 At the end of paragraph 130D(4)(a)

Add:

(iv) any duties required to be performed under the

Financial

Accountability Regime Act 2021

; or

90 Paragraph 131AA(2)(c)

Omit "the prudential standards or the

Financial Sector (Collection of

Data) Act 2001

", substitute "the prudential standards, the

Financial

Sector (Collection of Data) Act 2001

or the

Financial Accountability

Regime Act 2021

Consequential amendments

Schedule 1

Amendments for the start of the financial accountability regime

Part 1

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

91 At the end of paragraph 131A(1)(a)

Add:

(iv) any duties required to be performed under the

Financial

Accountability Regime Act 2021

; or

92 Subparagraph 313(1)(a)(ii)

Omit "this Act or under the

Financial Sector (Collection of Data) Act

2001

", substitute "this Act, or under the

Financial Sector (Collection of

Data) Act 2001

or the

Financial Accountability Regime Act 2021

,".

Schedule 1

Consequential amendments

Part 2

Amendments for the end of the banking executive accountability regime

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

Part 2--Amendments for the end of the banking

executive accountability regime

Australian Prudential Regulation Authority Act 1998

93 Subsection 56(1) (paragraph (cb) of the definition of

protected document)

Repeal the paragraph.

94 Subsection 56(1) (paragraph (cb) of the definition of

protected information)

Repeal the paragraph.

95 Paragraph 56(2)(c)

Omit "(7D), (7E), (7F),".

96 Subsections 56(7D), (7E) and (7F)

Repeal the subsections.

97 Paragraph 56(12)(a)

Omit "(7D), (7E), (7F),".

Banking Act 1959

98 Paragraph 2A(2)(e)

Repeal the paragraph.

99 Subsection 5(1) (definition of accountable person)

Repeal the definition.

100 Subsection 5(1) (paragraph (g) of the definition of

direction under this Act)

Omit "31F;", substitute "31F.".

Consequential amendments

Schedule 1

Amendments for the end of the banking executive accountability regime

Part 2

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

101 Subsection 5(1) (paragraph (h) of the definition of

direction under this Act)

Repeal the paragraph.

102 Subsection 5(1)

Repeal the following definitions:

(a) definition of

large ADI

;

(b) definition of

medium ADI

;

non-ADI holding company

;

(d) definition of

remuneration

;

(e) definition of

small ADI

;

(f) definition of

variable remuneration

103 Subsection 11AF(1AC)

Repeal the subsection.

104 Paragraphs 11CG(1)(b) and (2)(a)

Omit ", 29 or 37DB", substitute "or 29".

105 Subsection 11CG(2A)

Omit ", 29 or 37DB", substitute "or 29".

106 Part IIAA

Repeal the Part.

Schedule 2

Application, saving and transitional provisions

Part 1

Preliminary

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

Schedule 2--Application, saving and

transitional provisions

Part 1--Preliminary

1 Definitions

(1)

In this Schedule:

banking start time

means the time when Part 2 of Schedule 1

commences.

BEAR

means:

(a) Part IIAA of the old Banking Act; and

(b) any instruments made under that Part as in force immediately

before the banking start time; and

provision of that Part.

FAR Act

means the

Financial Accountability Regime Act 2021

FAR start time

for a body corporate that is an accountable entity under

subsection 9(3) of the FAR Act means the time when the body

corporate starts to be an accountable entity, as determined under

subsection 9(4) of the FAR Act.

old Banking Act

means the

Banking Act 1959

, and any instruments

made under that Act, as in force immediately before the banking start

time.

(2)

Expressions used in this Schedule that are defined for the purposes of

the FAR Act, and used in relation to that Act, have the same meaning as

in that Act.

(3)

Expressions used in this Schedule that were defined for the purposes of

the old Banking Act, and are used in relation to that Act, have the same

meaning as in that Act.

2 Section 7 of the Acts Interpretation Act 1901

This Schedule does not limit the effect of section 7 of the

Acts

Interpretation Act 1901

as it applies in relation to the repeals made by

this Act.

Application, saving and transitional provisions

Schedule 2

Preliminary

Part 1

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

3 Compensation for acquisition of property

(1)

If the operation of the old Banking Act, or of this Act or the FAR Act as

it applies under this Act, would result in an acquisition of property

(within the meaning of paragraph 51(xxxi) of the Constitution) from a

person otherwise than on just terms (within the meaning of that

paragraph), the Commonwealth is liable to pay a reasonable amount of

compensation to the person.

(2)

Subitem (1) applies whether the acquisition of property occurred before

or occurs after the commencement of this Part.

(3)

If the Commonwealth and the person do not agree on the amount of the

compensation, the person may institute proceedings in:

(a) the Federal Court of Australia; or

(b) the Supreme Court of a State or Territory;

for the recovery from the Commonwealth of such reasonable amount of

compensation as the court determines.

Schedule 2

Application, saving and transitional provisions

Part 2

Banking sector

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

Part 2--Banking sector

Division 1

--Key personnel obligations

4 Persons registered under BEAR

When this item applies

(1)

This item applies in relation to a person and an ADI if, immediately

before the banking start time:

(a) the person is an accountable person of the ADI, or of a

subsidiary of the ADI, under the old Banking Act; and

(b) the person is registered under section 37HA of the old

Banking Act.

Accountable persons taken to be registered under FAR

(2)

If, at the banking start time, the person is an accountable person of the

ADI or the subsidiary under section 10 of the FAR Act, then the person

is taken from the banking start time to be registered under the FAR Act

as an accountable person in respect of the ADI or the subsidiary.

Note 1: If the person was an accountable person of a subsidiary of the ADI, and the subsidiary is

not a significant related entity of the ADI under the FAR Act, then the person may not

be an accountable person of the ADI or the subsidiary under the FAR Act.

Note 2: See also item 13 (old accountability statement taken to be new accountability

statement).

Persons ceasing to be accountable persons

(3)

If, at the banking start time, the person is

not

an accountable person of

the ADI or the subsidiary under section 10 of the FAR Act, then:

(a) the person is taken to have ceased to be an accountable

person of the ADI or the subsidiary for the purposes of the

paragraph 32(a) of the FAR Act; and

(b) for the purposes of subparagraph 31(1)(a)(i) of the FAR Act,

that ceasing event is taken to have occurred at the banking

start time.

Note:

Events mentioned in section 32 of the FAR Act must be notified to the Regulator in

accordance with section 31 of the FAR Act (notification obligations of an accountable

Application, saving and transitional provisions

Schedule 2

Banking sector

Part 2

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

entity). Failure to comply with a notification obligation is a contravention of a civil

penalty provision (see section 80 of the FAR Act).

5 Persons disqualified under BEAR

When this item applies

(1)

This item applies in relation to a person if:

(a) before the banking start time, the person is disqualified from

being, or acting as, an accountable person under section 37J

of the old Banking Act; and

(b) the disqualification is in effect immediately before the

banking start time.

Persons are taken to be disqualified under FAR

(2)

The person is taken, from the banking start time, to be disqualified from

being or acting as an accountable person under section 42 of the FAR

Act.

(3)

For the purposes of subsection 42(2) of the FAR Act, the

disqualification applies in accordance with the following table.

Disqualified accountable persons

Item

Column 1

If, before the banking start

time, the person is disqualified

under the old Banking Act in

relation to ...

Column 2

then, from the banking start time,

the person is taken to be disqualified

under the FAR Act in relation to ...

a particular ADI

the accountable entity that is that ADI.

a particular subsidiary of an ADI

if the subsidiary is a significant related

entity of the accountable entity that is

the ADI--that significant related

entity.

a class of ADIs

a class of accountable entities that

includes those ADIs.

a class of subsidiaries of ADIs

a class of significant related entities of

accountable entities that includes those

subsidiaries of ADIs.

any ADI

any accountable entity.

Schedule 2

Application, saving and transitional provisions

Part 2

Banking sector

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

Disqualified accountable persons

Item

Column 1

If, before the banking start

time, the person is disqualified

under the old Banking Act in

relation to ...

Column 2

then, from the banking start time,

the person is taken to be disqualified

under the FAR Act in relation to ...

any subsidiary of an ADI

any significant related entity of an

accountable entity.

(4)

The period of disqualification ends when the period of the

disqualification under the old Banking Act would have ended.

(5)

Paragraphs 42(1)(a) and (b) and subsections 42(3) to (7) of the FAR Act

do not apply in relation to the disqualification.

Applications to vary or revoke disqualification

(6)

If:

(a) before the banking start time, the person applies to APRA

under section 37JA of the old Banking Act to vary or revoke

the disqualification; and

(b) as at the banking start time, the application has not been

withdrawn by the applicant, or dealt with by APRA;

the application is taken, after the banking start time, to have been made

under section 43 of the FAR Act.

6 Pending applications to register a person under BEAR

When this item applies

(1)

This item applies if:

(a) before the banking start time, an application is made to

APRA under section 37HA of the old Banking Act to register

a person as an accountable person; and

(b) as at the banking start time, the application has not been

withdrawn by the applicant, or dealt with by APRA.

Application, saving and transitional provisions

Schedule 2

Banking sector

Part 2

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

Application taken to be made under FAR

(2)

The application is taken to be an application made under section 41 of

the FAR Act.

Note:

The Regulator may request further information under subsection 41(3) of the FAR Act.

(3)

For the purposes of paragraph 41(5)(a) of the FAR Act, the application

is taken to have been made at the banking start time.

7 Persons filling a temporary or unforeseen vacancy when

FAR starts

To avoid doubt, the period of 90 days referred to in paragraph 24(2)(a)

of the FAR Act begins no earlier than the banking start time, regardless

of when the person started to fill the temporary or unforeseen vacancy.

8 Applications to register under FAR

When this item applies

(1)

This item applies to a body corporate that is:

(a) an ADI; or

(b) an authorised NOHC of an ADI.

Early application for registration of accountable persons

(2)

From 30 days before the banking start time, the body corporate may

apply to the Regulator under section 41 of the FAR Act to register a

person as an accountable person in respect of the body or a significant

related entity of the body.

(3)

If the body corporate makes the application before the banking start

time, section 41 of the FAR Act (and any other provision of the FAR

Act that applies in relation to that section) applies in relation to the body

corporate as if the body corporate were an accountable entity.

Note:

Under paragraph 41(2)(d) of the FAR Act, if an accountable entity meets the enhanced

notification threshold under subsection 31(3) of the FAR Act, the application must

include an accountability statement for the person complying with section 33 of the

FAR Act.

Schedule 2

Application, saving and transitional provisions

Part 2

Banking sector

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

When registration comes into force

(4)

The registration of the person as an accountable person comes into force

at the later of the following times:

(a) the banking start time;

(b) when the Regulator registers the person.

9 Disqualification under FAR for non-compliance with BEAR

APRA may, after the banking start time, disqualify a person under

section 42 of the FAR Act from being, or acting as, an accountable

person if APRA is satisfied that:

(a) the person has failed to comply with one or more of their

obligations under section 37CA of the old Banking Act; and

(b) the disqualification is justified, having regard to the

seriousness of the failure to comply.

Note:

A decision to disqualify a person is a reviewable decision under Part 5

of Chapter 3 of the FAR Act.

Division 2

--Deferred remuneration obligations

10 Deferral of variable remuneration continues under BEAR

after FAR starts

When this item applies

(1)

This item applies in relation to a person if:

(a) immediately before the banking start time, the person is an

accountable person of an ADI, or of a subsidiary of an ADI,

under the old Banking Act; and

(b) at the banking start time, the person is an accountable person

of the ADI or subsidiary under section 10 of the FAR Act.

Old Banking Act continues to apply until FAR applies

(2)

Despite the repeal of Part IIAA of the

Banking Act 1959

by Part 2 of

Schedule 1, the old Banking Act applies, after the banking start time, in

relation to the variable remuneration of the accountable person unless

Part 5 of Chapter 2 of the FAR Act applies to the variable remuneration

(see item 11 of this Schedule).

Application, saving and transitional provisions

Schedule 2

Banking sector

Part 2

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

Note:

APRA may exercise powers etc. under repealed provisions for the purposes of this item:

see item 29.

11 Deferral of variable remuneration under FAR

When this item applies

(1)

This item applies in relation to a person who is an accountable person

under section 10 of the FAR Act of an entity (the

deferring entity

) that

is, at the banking start time:

(a) an accountable entity under subsection 9(1) of the FAR Act;

(b) a significant related entity of such an accountable entity.

FAR applies to financial years starting at least 6 months after

banking start time

(2)

Part 5 of Chapter 2 of the FAR Act applies in relation to the variable

remuneration of the accountable person only if the minimum deferral

period for the variable remuneration (see section 28 of the FAR Act)

starts in:

(a) the first financial year of the deferring entity that begins after

the end of the period of 6 months after the banking start time;

(b) a later financial year.

12 Deferral of variable remuneration under BEAR

--savings

provision

When this item applies

(1)

This item applies in relation to a person if:

(a) immediately before the banking start time:

(i) the person is an accountable person of an ADI, or of a

subsidiary of an ADI, under the old Banking Act; and

(ii) Division 4 of Part IIAA of the old Banking Act applies

in relation to the variable remuneration of the person;

and

(b) at the banking start time, the person is

not

an accountable

person of the ADI or the subsidiary under section 10 of the

FAR Act.

Schedule 2

Application, saving and transitional provisions

Part 2

Banking sector

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

Note:

If the person was an accountable person of a subsidiary of the ADI, and the subsidiary is

not a significant related entity of the ADI under the FAR Act, then the person may not

be an accountable person of the ADI or the subsidiary under the FAR Act.

Old Banking Act continues to apply

(2)

Despite the repeal of Part IIAA of the

Banking Act 1959

by Part 2 of

Schedule 1, the old Banking Act continues to apply, after the banking

start time, in relation to the variable remuneration, as if that repeal had

not happened.

Division 3

--Notification obligations

13 Accountability statements under BEAR

When this item applies

(1)

This item applies if:

(a) before the banking start time, an ADI or a subsidiary of an

ADI gave APRA a document (the

old accountability

statement

) complying with section 37FA of the old Banking

Act for a person who was registered under section 37HA of

that Act; and

(b) at the banking start time, the person is an accountable person

of the ADI or of the subsidiary under section 10 of the FAR

Act.

Note:

For transfer of registration of the person, see item 4.

(2)

The old accountability statement (including any changes notified to

APRA before the banking start time) is taken, from the banking start

time, to have been given to the Regulator in accordance with section 33

of the FAR Act for the person.

Note:

Any material change to the information contained in the accountability statement must

be notified to the Regulator: see subsection 31(2) of the FAR Act.

14 Notification obligations under BEAR

--savings provision

(1)

Despite the repeal of Part IIAA of the

Banking Act 1959

by Part 2 of

Schedule 1, the old Banking Act continues to apply, after the banking

start time, in relation to an obligation covered by subitem (2) and

arising before that time, as if that repeal had not happened.

Application, saving and transitional provisions

Schedule 2

Banking sector

Part 2

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

(2)

For the purposes of subitem (1), the obligations are any of the

following:

(a) an obligation under paragraph 37F(1)(a) of the old Banking

Act to notify APRA of a change to an accountability

statement;

(b) an obligation under paragraph 37F(1)(b) of the old Banking

Act to notify APRA of a change to an accountability map;

Act to notify APRA of an event.

Division 4

--Regulatory powers and enforcement

15 Directions about reallocating responsibilities given under

BEAR

When this item applies

(1)

This item applies if:

(a) before the banking start time, APRA gives a body corporate a

direction under section 37DB of the old Banking Act in

relation to a responsibility; and

(b) as at the banking start time, APRA has not revoked the

direction.

Direction under FAR Act taken to be given

(2)

After the banking start time, the direction continues in force (and may

be dealt with) as if it had been given by the Regulator under section 65

of the FAR Act.

(3)

For the purposes of section 65 of the FAR Act:

(a) the requirements in paragraphs 65(3)(a) and (c) are taken to

be met; and

(b) if the direction under section 37DB of the old Banking Act

did not specify a period within which the direction is to be

complied with--paragraph 65(3)(b) does not apply to the

direction.

Schedule 2

Application, saving and transitional provisions

Part 2

Banking sector

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

Secrecy obligations

(4)

If, immediately before the banking start time, the direction was covered

by a determination under subsection 11CH(2) of the old Banking Act,

then it is taken after the banking start time to be covered by a

determination under subsection 67(2) of the FAR Act.

(5)

If, immediately before the banking start time, the direction was covered

by a determination under subsection 11CK(2) or (5) of the old Banking

Act, then it is taken after the banking start time to be covered by:

(a) for a direction covered by a determination under

subsection 11CK(2) of the old Banking Act--a determination

under subsection 70(2) of the FAR Act;

(b) for a direction covered by a determination under

subsection 11CK(5) of the old Banking Act--a determination

under subsection 70(4) of the FAR Act.

16 Directions under FAR for non-compliance with BEAR

When this item applies

(1)

This item applies if:

(a) APRA has reason to believe that a body corporate has

contravened a provision of Part IIAA of the old Banking Act

before the banking start time; and

(b) as at the banking start time, APRA has not given a direction

under section 11CA of the old Banking Act in relation to the

contravention; and

is an accountable entity.

APRA may give direction under FAR Act

(2)

Both of the following apply:

(a) APRA may give the body corporate a direction under

section 64 of the FAR Act;

(b) for the purposes of paragraph 64(3)(b) of the FAR Act, the

ground for giving the direction is the contravention of the old

Banking Act provision.

Application, saving and transitional provisions

Schedule 2

Banking sector

Part 2

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

17 Revocation of authority for non-compliance with FAR

The amendment of section 9A of the

Banking Act 1959

made by Part 1

of Schedule 1 applies in relation to a body corporate's authority under

section 9 of that Act whether the authority was granted before or after

the banking start time.

18 Contraventions under BEAR

--savings provision

(1)

Despite the repeal of Part IIAA of the

Banking Act 1959

by Part 2 of

Schedule 1, the old Banking Act continues to apply, after the banking

start time, in relation to a contravention (or an alleged contravention) of

a provision of the BEAR that occurs before that time, as if that repeal

had not been made.

(2)

This item does not limit any other item of this Schedule.

Note:

As a result, APRA may have a choice as to whether to deal with BEAR non-compliance

under the old Banking Act or whether to take action under the FAR Act in reliance on

item 9 or 16 of this Schedule.

19 Directions under BEAR for non-compliance with BEAR

savings provision

When this item applies

(1)

This item applies if:

(a) before the banking start time, APRA gives a body corporate a

direction under section 11CA of the old Banking Act in

relation to a contravention of the BEAR; and

(b) as at the banking start time, APRA has not revoked the

direction.

Old Banking Act continues to apply

(2)

Despite the repeals and amendments of the

Banking Act 1959

made by

Part 2 of Schedule 1, the old Banking Act continues to apply, after the

banking start time, in relation to the direction, as if those repeals and

amendments had not been made.

Schedule 2

Application, saving and transitional provisions

Part 2

Banking sector

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

20 Review of decisions under BEAR

--savings provision

Despite the repeal of Part IIAA of the

Banking Act 1959

by Part 2 of

Schedule 1, Part VI (review of decisions) of the old Banking Act

continues to apply, after the banking start time, in relation to a decision

made under Part IIAA of the

Banking Act 1959

(a) before the banking start time; or

(b) after the banking start time as a result of the operation of a

provision of this Schedule;

as if that repeal had not been made.

21 Enforceable undertakings and injunctions under BEAR

savings provision

To avoid doubt, the repeal of Part IIAA of the

Banking Act 1959

Part 2 of Schedule 1 does not affect:

(a) an enforceable undertaking given under section 18A of the

old Banking Act before the banking start time; or

(b) an injunction granted under section 65A of the old Banking

Act before the banking start time.

Application, saving and transitional provisions

Schedule 2

Other sectors

Part 3

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

Part 3--Other sectors

Division 1

--Key personnel obligations

22 Applications to register under FAR

When this item applies

(1)

This item applies to a body corporate that is any of the following:

(a) a general insurer;

(b) an authorised NOHC of a general insurer;

(d) a registered NOHC of a life company;

(e) a private health insurer;

(f) an RSE licensee.

Early application for registration of accountable persons

(2)

From 30 days before the FAR start time for the body corporate, the

body may apply to the Regulator under section 41 of the FAR Act to

significant related entity of the body.

(3)

If the body corporate makes the application before the FAR start time,

section 41 of the FAR Act (and any other provision of the FAR Act that

applies in relation to that section) applies in relation to the body

corporate as if the body corporate were an accountable entity.

Note:

Under paragraph 41(2)(d) of the FAR Act, if the accountable entity meets the enhanced

notification threshold under subsection 31(3) of the FAR Act, the application must

include an accountability statement for the person complying with section 33 of the

FAR Act.

When registration comes into force

(4)

The registration of the person as an accountable person comes into force

at the later of the following times:

(a) the FAR start time for the body corporate;

(b) when the Regulator registers the person.

Schedule 2

Application, saving and transitional provisions

Part 3

Other sectors

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

Division 2

--Deferred remuneration obligations

23 Deferral of remuneration under FAR

When this item applies

(1)

This item applies in relation to a person who is an accountable person

under section 10 of the FAR Act of:

(a) an accountable entity under subsection 9(3) of the FAR Act;

(b) a significant related entity of such an accountable entity.

Deferred remuneration obligations apply when entity becomes an

accountable entity

(2)

Part 5 of Chapter 2 of the FAR Act applies in relation to the variable

remuneration of the accountable person only if the day referred to in

paragraph 28(2)(a) of the FAR Act in relation to the remuneration

occurs after the FAR start time for the accountable entity referred to in

paragraph (1)(a) or (b) of this item.

Division 3

--Insurance

24 Revocation of authorisation for non-compliance with FAR

The amendment of section 15 of the

Insurance Act 1973

made by Part 1

of Schedule 1 applies in relation to a body corporate's authorisation

under section 12 of that Act whether the authorisation was granted

before or after the FAR start time for the body corporate.

Division 4

--Life insurance

25 Application for registration as a life company

The amendment of section 21 of the

Life Insurance Act 1995

made by

Part 1 of Schedule 1 applies in relation to an application under

section 20 of the

Life Insurance Act 1995

for registration as a life

company if:

(a) the application was made before the commencement of this

Part and, as at that commencement, APRA has not decided

the application; or

(b) the application is made after that commencement.

Application, saving and transitional provisions

Schedule 2

Other sectors

Part 3

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

26 Revocation of registration for non-compliance with FAR

The amendment of section 26 of the

Life Insurance Act 1995

made by

Part 1 of Schedule 1 applies in relation to a body corporate's

registration under section 21 of that Act whether the registration was

made before or after the FAR start time for the body corporate.

Division 5

--Private health insurance

27 Cancellation of registration for non-compliance with FAR

The amendment of section 21 of the

Private Health Insurance

(Prudential Supervision) Act 2015

made by Part 1 of Schedule 1 applies

in relation to a body corporate's registration under section 15 of that

Act whether the registration was made before or after the FAR start

time for the body corporate.

Division 6

--Superannuation

28 Cancellation of RSE licence for non-compliance with FAR

The amendment of the definition of

RSE licensee law

subsection 10(1) of the

Superannuation Industry (Supervision) Act 1993

made by Part 1 of Schedule 1 applies in relation to a body corporate's

RSE licence under section 29D of that Act whether the RSE licence was

granted before or after the FAR start time for the body corporate.

Schedule 2

Application, saving and transitional provisions

Part 4

APRA and ASIC

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

Part 4--APRA and ASIC

Division 1

--Transition from the BEAR

29 Doing things under repealed provisions

(1)

The amendments of the

Australian Prudential Regulation Authority Act

1998

and the

Banking Act 1959

made by Part 2 of Schedule 1 do not

apply for the purpose of APRA exercising any right or power,

performing any obligation or duty or doing any other thing (including

under a provision that is itself repealed or amended):

(a) in relation to variable remuneration to which the old Banking

Act applies under item 10 of this Schedule; or

(b) in relation to any other matter in relation to which an item of

this Schedule requires or permits APRA to do something

under the old Banking Act.

Secrecy

(2)

In addition to subitem (1), despite the amendments of section 56 of the

Australian Prudential Regulation Authority Act 1998

made by Part 2 of

Schedule 1, that Act as in force immediately before the banking start

time, continues to apply in relation to:

(a) information disclosed or obtained before or after the

commencement of that Part and relating to the affairs of a

person in relation to whom information is, or was, required to

be given under Part IIAA of the

Banking Act 1959

(including

that Part as it continues to apply under an item of this

Schedule); and

(b) a document given or produced before or after the

commencement of that Part and containing information

relating to the affairs of a person in relation to whom

information is, or was, required to be given under Part IIAA

of the

Banking Act 1959

(including that Part as it continues to

apply under an item of this Schedule)

Application, saving and transitional provisions

Schedule 2

APRA and ASIC

Part 4

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

30 Agreement about exercise of powers

Section 38 of the FAR Act does not apply in relation to APRA

performing a function, or exercising a power, that an item of this

Schedule requires or permits APRA to perform or exercise.

Division 2

--Application of the FAR

31 Secrecy

The amendments of sections 3 and 56 of the

Australian Prudential

Regulation Authority Act 1998

made by Part 1 of Schedule 1 apply in

relation to:

(a) any disclosure of information after the commencement of

that Part, whether the information was disclosed or obtained

under, or for the purposes of, a prudential regulation

framework law before or after that commencement; and

(b) any production of a document after the commencement of

that Part, whether the document was given or produced

under, or for the purposes of, a prudential regulation

framework law before or after that commencement.

Information to be included in APRA's annual report

The amendment of section 59 of the

Australian Prudential Regulation

Authority Act 1998

made by Part 1 of Schedule 1 applies to reports on

APRA's investigations during the financial year ending on 30 June

2023, and later financial years.

33 Sharing information and documents between APRA and

ASIC

(1)

Section 39 of the FAR Act is taken to apply in relation to information

disclosed to or obtained by APRA or ASIC, or a document that is given

or produced to APRA or ASIC, under or for the purposes of:

(a) the BEAR; or

(b) this Schedule.

(2)

Section 39 of the FAR Act (including as it applies because of

subitem (1) of this item) applies in relation to information disclosed or

obtained, or a document that is given or produced, whether before or

after the FAR Act commences.

Schedule 2

Application, saving and transitional provisions

Part 5

Transitional rules

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

No. , 2021

Part 5--Transitional rules

34 Transitional rules

(1)

ASIC and APRA may jointly, by legislative instrument, make rules

prescribing matters of a transitional nature (including prescribing any

saving or application provisions) relating to:

(a) the amendments or repeals made by this Act; or

(b) the enactment of this Act or the FAR Act.

(2)

To avoid doubt, the rules may not do the following:

(a) create an offence or civil penalty;

(b) provide powers of:

(i) arrest or detention; or

(ii) entry, search or seizure;

(d) set an amount to be appropriated from the Consolidated

Revenue Fund under an appropriation in this Act;

(e) directly amend the text of this Act or the FAR Act.

(3)

This Act (other than subitem (2) of this item) does not limit the rules

that may be made.

Financial services compensation scheme of last resort

Schedule 3

Main amendments

Part 1

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

Schedule 3--Financial services compensation

scheme of last resort

Part 1--Main amendments

Corporations Act 2001

1 Section 761A

Insert:

accumulation recovery day

means the day the Bill for the

Financial Sector Reform (Hayne Royal Commission Response No.

3) Act 2021

was introduced into the House of Representatives.

AFCA's accumulated unpaid fees

has the meaning given by

subsection 1058B(4).

AFCA's unpaid fees

, for a month, has the meaning given by

subsection 1058B(2).

capital reserve establishment contribution

has the same meaning

as in the

Financial Services Compensation Scheme of Last Resort

Levy (Collection) Act 2021

CSLR operator

(short for financial services compensation scheme

of last resort operator) means the person for whom an authorisation

under section 1060 is in force.

CSLR staff member

means:

(a) a director, officer or employee of the CSLR operator; or

(b) a person engaged as a consultant to, or to perform services

for, the CSLR operator for the purposes of the financial

services compensation scheme of last resort.

financial services compensation scheme of last resort

means the

financial services compensation scheme of last resort established

under Part 7.10B.

financial services compensation scheme of last resort operator

see

CSLR operator

Schedule 3

Financial services compensation scheme of last resort

Part 1

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No. , 2021

levy period

has the same meaning as in the

Financial Services

Compensation Scheme of Last Resort Levy Act 2021

pre-CSLR complaint

has the same meaning as in the

Financial

Services Compensation Scheme of Last Resort Levy (Collection)

Act 2021

relevant AFCA determination

has the meaning given by section

1065.

revised claims, fees and costs estimate

has the same meaning as in

the

Financial Services Compensation Scheme of Last Resort Levy

Act 2021

sub-sector

has the same meaning as in the

Financial Services

Compensation Scheme of Last Resort Levy Act 2021

sub-sector levy cap

has the same meaning as in the

Financial

Services Compensation Scheme of Last Resort Levy Act 2021

2 At the end of Part 7.10A

Add:

Division 4--Information sharing and reporting

1058A Authorised use or disclosure of information

(1) An AFCA staff member may use or disclose information or

documents obtained by the AFCA staff member under or for the

purposes of this Part if:

(a) the use or disclosure is for the purposes of:

(i) this Part; or

(ii) Part 7.10B; or

(iii) the

Financial Services Compensation Scheme of Last

Resort Levy Act 2021

; or

(iv) the

Financial Services Compensation Scheme of Last

Resort Levy (Collection) Act 2021

; or

(b) the use or disclosure is to the CSLR operator for the purposes

of assisting the CSLR operator to perform its functions or

exercise its powers.

Financial services compensation scheme of last resort

Schedule 3

Main amendments

Part 1

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

(2) In this section:

use or disclosure

, for information or documents, includes making a

record of the information, disclosing the information, producing

the document or permitting access to the document.

1058B AFCA reporting to CSLR operator

Notification of unpaid fees to CSLR operator

(1) AFCA must notify the CSLR operator, in writing, of AFCA's

unpaid fees, for a month ending on or after the accumulation

recovery day, as soon as practicable after the end of the month.

Note:

The notification could include information about AFCA's unpaid fees,

including whether those fees relate to pre-CSLR complaints.

(2)

AFCA's unpaid fees

, for a month, is the sum of each fee that:

(a) relates to a complaint:

(i) made against a person (the

AFCA member

) who, at the

time the complaint was made, was a member of the

AFCA scheme; and

(ii) about a product, or service, of a kind mentioned in

subsection 1065(2); and

(iii) that has been finalised by AFCA (including by making a

determination); and

(b) AFCA has charged to the AFCA member; and

(d) AFCA finished taking steps to recover on or after the

accumulation recovery day and during the month, which may

have included taking one or more of the following steps if

AFCA considered them appropriate:

(i) seeking an explanation from the AFCA member for the

AFCA member not paying the fee;

(ii) explaining to the AFCA member the consequences of

not paying the fee;

(iii) discussing with the AFCA member a reasonable

payment plan or other alternatives to paying the fee;

(iv) if the AFCA member is (or has become) a Chapter 5

body corporate--engaging with an officer of the

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Part 1

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Bill 2021

No. , 2021

Chapter 5 body corporate to assess whether the body

can pay the fee to AFCA.

Note:

In addition to the steps in subparagraphs (d)(i) to (iv), AFCA may take

any other steps it considers appropriate and cost effective.

AFCA's accumulated unpaid fees

(3) AFCA must notify the CSLR operator, in writing, of AFCA's

accumulated unpaid fees as soon as practicable after the

accumulation recovery day.

(4)

AFCA's accumulated unpaid fees

is the sum of each fee that:

(a) relates to a complaint:

(i) made against a person (the

AFCA member

) who, at the

time the complaint was made, was a member of the

AFCA scheme; and

(ii) about a product, or service, of a kind mentioned in

subsection 1065(2); and

(iii) that has been finalised by AFCA (including by making a

determination); and

(b) AFCA has charged to the AFCA member; and

(d) AFCA finished taking steps to recover during the period:

(i) starting on 1 November 2018; and

(ii) ending on the day before the accumulation

recovery

day;

which may have included taking one or more of the steps

mentioned in subparagraphs (2)(d)(i) to (iv) of this section if

AFCA considered them appropriate.

3 After Part 7.10A

Insert:

Financial services compensation scheme of last resort

Schedule 3

Main amendments

Part 1

No. , 2021

Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

Part 7.10B--Financial services compensation

scheme of last resort

Division 1--Establishment of the scheme

1059 Establishment of the scheme

The financial services compensation scheme of last resort is

established by this Part.

1060 Minister may authorise an operator of the scheme

(1) The Minister may, by notifiable instrument, authorise a person to

operate the financial services compensation scheme of last resort if

the Minister is satisfied the person will meet the mandatory

requirements under section 1062.

Note:

The person who is authorised by the Minister to operate the scheme is

the CSLR operator (short for financial services compensation scheme

of last resort operator).

(2) An authorisation of a person to operate the financial services

compensation scheme of last resort must not come into force while

an authorisation of another person to operate that scheme is in

force.

(3) The Minister may, by notifiable instrument, vary or revoke an

authorisation.

(4) In an instrument made under subsection (1) or (3), the Minister:

(a) must specify the day the authorisation, variation or

revocation comes into force; and

(b) may impose, vary or revoke conditions relating to the

authorisation.

1061 Minister may appoint independent member

The Minister may, by written instrument, appoint an independent

person to be a member of the board of the CSLR operator.

Note:

The independent person appointed by the Minister is the Chair of the

board (see the mandatory requirement in paragraph 1062(3)(d)).

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Part 1

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Bill 2021

No. , 2021

1062 Mandatory requirements

(1) The mandatory requirements for a person (the

operator

) to operate

the financial services compensation scheme of last resort are:

(a) the organisational requirement under subsection (2); and

(b) the operator requirements under subsection (3); and

(d) the compliance requirements under subsection (5).

Organisational requirement

(2) The organisational requirement is that the operator does not require

a person applying for compensation to pay any fee or charge to the

operator, or to any other entity, in relation to the application.

Operator requirements

(3) The operator requirements are that:

(a) the operator is a company limited by guarantee; and

(b) the operator's constitution provides that the operator must not

be operated for profit; and

operator by the Commonwealth must be maintained for the

purposes of the financial services compensation scheme of

last resort; and

(d) the operator's constitution provides that the Chair of the

board of the operator must be an independent person

appointed by the Minister as a member of the board; and

(e) the operator's constitution provides that, within 6 months

after the operator is authorised under section 1060, the

following must be appointed as members of the board:

(i) the person who is the Chair of the board of AFCA;

(ii) a person who is a Fellow of the Institute of Actuaries of

Australia and has at least 5 years' experience in

actuarial analysis.

Operational requirements

(4) The operational requirements are that:

Financial services compensation scheme of last resort

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Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

(a) the operator operates in accordance with the operator's

constitution; and

(b) the operator administers the financial services compensation

scheme of last resort in accordance with this Part and

regulations made for the purposes of this Part; and

is efficient, effective and economical; and

(d) the operator has appropriate expertise available to deal with

applications for compensation; and

(e) the operator has appropriate expertise available to undertake

actuarial analysis and modelling to estimate the value of

claims to be made against the financial services

compensation scheme of last resort.

Compliance requirements

(5) The compliance requirements are that:

(a) the operator is to ensure that any conditions of the

authorisation of the operator (see paragraph 1060(4)(b)) are

complied with; and

(b) the operator is to ensure that regulatory requirements issued

under section 1069K are complied with.

Division 2--Compensation payments under the scheme

1063 Compensation payments

(1) The CSLR operator must pay to a person an amount of

compensation for a relevant AFCA determination made in respect

of the person if:

(a) the person is eligible under section 1064 for compensation

for the determination; and

(b) the amount of compensation for the determination is the

amount referred to in section 1067; and

amount of compensation; and

(d) the person has accepted under section 1069 that offer of that

amount of compensation.

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Part 1

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Bill 2021

No. , 2021

(2) The CSLR operator must pay the amount of compensation to the

person:

(a) in a single lump sum; or

(b) if a determination under subsection 1069H(2) specifies,

under subsection 1069H(3), a class of persons that includes

the person--in the instalments specified in the determination

for that class of persons over the period specified in the

determination.

(3) The CSLR operator must not pay an amount under this section

before:

(a) the start of the first levy period; or

(b) any later day prescribed by regulations made for the purposes

of this paragraph.

1064 Eligibility for compensation payments

Eligibility for compensation

(1) A person is eligible for compensation for a relevant AFCA

determination made in respect of the person if:

(a) the determination requires an amount to be paid to the person

by another person (the

AFCA member

); and

(b) the person has notified AFCA within:

(i) 12 months after the day the determination was made; or

(ii) such longer period as AFCA agrees with the person;

that the person has not been paid the amount; and

paid to the person by the AFCA member, which may have

included taking one or more of the steps mentioned in

subsection (2) if AFCA considered them appropriate; and

(d) AFCA has notified the person, in writing, that AFCA has

finished taking such steps; and

(e) the amount has not been fully paid to the person; and

(f) the person is not eligible to receive, under any other statutory

compensation scheme, compensation:

(i) for the matters covered by the determination; and

(ii) for an amount equal to or greater than the amount

required to be paid under the determination; and

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Financial Sector Reform (Hayne Royal Commission Response No. 3)

Bill 2021

(g) the person applies in accordance with section 1066 to the

CSLR operator for compensation for the determination; and

(h) the person has not withdrawn that application for

compensation; and

(i) the CSLR operator reasonably believes that the AFCA

member is, having regard to the AFCA member's financial

position, unlikely to fully pay the amount.

Note:

A person's application for compensation may be withdrawn at any

time before an offer of compensation is accepted by the person (see

subsection 1066(4)).

Appropriate steps by AFCA

(2) For the purposes of paragraph (1)(c), the steps are the following:

(a) seeking an explanation from the AFCA member for the

AFCA member not paying the amount to the person in

accordance with the relevant AFCA determination;

(b) explaining to the AFCA member the consequences of not

paying the amount to the person;

plan or other alternatives to paying the amount to the person;

(d) if the AFCA member is (or has become) a Chapter 5 body

corporate--engaging with an officer of the Chapter 5 body

corporate to assess whether the body will pay the amount to

the person.

Note:

In addition to these steps, AFCA may take any other steps it considers

appropriate and cost effective.

1065 Meaning of relevant AFCA determination

(1) A determination made by AFCA in respect of a person is a

relevant AFCA determination

if:

(a) the determination relates to a complaint:

(i) made by the person against another person (the

AFCA

member

) who, at the time the complaint was made, was

a member of the AFCA scheme; and

(ii) about a product, or service, of a kind mentioned in

subsection (2); and

(b) the determination:

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(i) requires the AFCA member to pay an amount to the

person; and

(ii) is accepted by the person.

(2) For the purposes of subparagraph (1)(a)(ii), the kinds of products

and services are as follows:

(a) engaging in a credit activity (within the meaning of the

National Consumer Credit Protection Act 2009

(i) as a credit provider; or

(ii) other than as a credit provider;

(b) providing financial product advice that is personal advice

provided to a person as a retail client about one or more

products that include at least one relevant financial product

(within the meaning of Part 7.6 of this Act);

issuing securities.

(3) In this section:

credit provider

has the same meaning as in any Part of the

National

Consumer Credit Protection Act 2009

other than Part 3-2CA.

1066 Applications for compensation payments

(1) A person may apply, in the approved form, to the CSLR operator

for compensation for a relevant AFCA determination made in

respect of the person.

(2) An application is in the approved form if and only if:

(a) it is in the form approved by the CSLR operator; and

(b) it includes any information (including any declarations)

required by the form; and

(3) The CSLR operator may approve a form for the purposes of

paragraph (2)(a).

(4) If a person makes an application for compensation for a relevant

AFCA determination made in respect of the person, the person

may:

Financial services compensation scheme of last resort

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Bill 2021

(a) amend the application at any time before the CSLR operator

offers under section 1068 to the person an amount of

compensation for the determination; or

(b) withdraw the application any time before the person accepts

under 1069 such an offer.

1067 Amount of compensation payments

The amount of compensation for a person for a relevant AFCA

determination made in respect of the person must be an amount

equal to the lower of the following amounts:

(a) $150,000;

(b) the amount payable to the person in accordance with the

relevant AFCA determination, less:

(i) any amount paid to the person in accordance with the

relevant AFCA determination, including any partial

payments or any payments made to the person as an

unsecured creditor of a Chapter 5 body corporate for the

matters covered by the determination; and

(ii) any compensation to which the person is eligible under

any other statutory compensation scheme for the matters

covered by the determination; and

(iii) any other payments made to the person of a kind

prescribed by regulations made for the purposes of this

subparagraph.

1068 Offer of compensation payments

Offer of compensation

(1) If a person is eligible under section 1064 for compensation for a

relevant AFCA determination made in respect of the person, the

CSLR operator must offer to the person, in writing, the amount of

compensation referred to in section 1067 for the determination.

(2) The offer must explain the effect of section 1069A (subrogation of

rights).

(3) Before the offer is accepted by the person, the CSLR operator may

vary or revoke the offer if the CSLR operator reasonably believes:

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(a) there is an error relating to the offer; or

(b) there is fraud relating to the offer; or

(i) the person's eligibility under section 1064 for the

amount of compensation in the offer; or

(ii) the amount of compensation in the offer; or

(d) other exceptional circumstances exist that justify the

variation or revocation.

Notification that person is not eligible for compensation

(4) If a person:

(a) is not eligible under section 1064 for compensation for a

relevant AFCA determination made in respect of the person;

and

(b) has made an application under section 1066 for compensation

for the relevant AFCA determination;

the CSLR operator must, as soon as reasonably practicable, notify

the person, in writing, that the person is not eligible for

compensation.

(5) A notice to a person under subsection (4) must include reasons

why the person is not eligible for compensation.

1069 Acceptance of offer of compensation payments

(1) A person accepts an offer made under section 1068 of an amount

of compensation if the person notifies the CSLR operator, in

writing, that the person accepts the offer.

(2) If the person does not accept the offer within 90 days after the day

the offer is made, the person is taken to have withdrawn their

application for compensation for the relevant AFCA determination

to which the offer relates.

1069A CSLR operator's right of subrogation if compensation is paid

If:

(a) the CSLR operator pays an amount of compensation:

(i) to a person under section 1063; and

Financial services compensation scheme of last resort

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(ii) for a relevant AFCA determination that required

payment of an amount by another person (the

AFCA

member

) who is, or was, a member of the AFCA

scheme; and

(b) the AFCA member is (or has become) a Chapter 5 body

corporate;

the CSLR operator is subrogated, to the extent of that amount of

compensation, to any rights and remedies that the person may

have, in relation to the relevant AFCA determination, that are

recognised by an officer of the Chapter 5 body corporate.

Division 3--Reimbursement of unpaid AFCA fees

1069B Payment of AFCA's unpaid fees

(1) The CSLR operator must pay to AFCA an amount equal to

AFCA's unpaid fees for a month starting on or after the

accumulation

recovery day if AFCA has notified the CSLR

operator of those fees in accordance with subsection 1058B(1).

(2) The CSLR operator must pay the amount to AFCA as soon as

reasonably practicable after AFCA's notification to the CSLR

operator of those fees.

(3) However, the CSLR operator must not pay an amount under this

section before:

(a) the start of the first levy period; or

(b) any later day prescribed by regulations made for the purposes

of this paragraph.

1069C Payment of AFCA's accumulated unpaid fees

(1) The CSLR operator must pay to AFCA an amount equal to

AFCA's accumulated unpaid fees if AFCA has notified the CSLR

operator of those fees in accordance with subsection 1058B(3).

(2) The CSLR operator must pay the amount to AFCA as soon as

reasonably practicable after AFCA's notification to the CSLR

operator of those fees.

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(3) However, the CSLR operator must not pay an amount under this

section before:

(a) the start of the first levy period; or

(b) any later day prescribed by regulations made for the purposes

of this paragraph.

Division 4--Powers, reporting and information sharing

Subdivision A--Powers of CSLR operator

1069D Power to obtain information and documents

(1) If the CSLR operator has reason to believe that a person is capable

of giving information or producing documents relevant to an

application for compensation under this Part, the CSLR operator

may, by written notice to the person, require the person:

(a) to give to the CSLR operator, by writing, any such

information; or

(b) to produce to the CSLR operator such documents or copies of

such documents as are stated in the notice;

in the manner and within the period specified in the notice.

(2) The period specified in a notice given under subsection (1) must be

at least 14 days after the day the notice is given.

(3) If documents (whether originals or copies) are so produced, the

CSLR operator:

(a) may take possession of, and may make copies of, or take

extracts from, the documents; and

(b) may keep the documents for as long as is necessary for the

purpose of dealing with the application; and

would be entitled to inspect any one or more of them (if the

documents were not in the possession of the CSLR operator)

to inspect at all reasonable times such of the documents as

that person would be so entitled to inspect.

(4) A person must not fail to comply with a requirement made by the

CSLR operator under subsection (1).

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Penalty: 30 penalty units.

(5) Subsection (4) is an offence of strict liability.

(6) Subsection (4) does not apply to the extent that the person has a

reasonable excuse.

Note:

A defendant bears an evidential burden in relation to the matter in this

subsection (see subsection 13.3(3) of the

Criminal Code

(7) If a person who is, or was, a member of the AFCA scheme fails,

without a reasonable excuse, to comply with a requirement made

by the CSLR operator under subsection (1), the CSLR operator

must notify AFCA and ASIC of the person's failure to comply

with the notice.

(8) The CSLR operator must not require ASIC to give information or

produce documents under this section.

Note:

For information sharing between ASIC and the CSLR operator, see

subparagraph 127(4)(aa)(ia) of the

Australian Securities and

Investments Commission Act 2001

Subdivision B--Information sharing and reporting

1069E Authorised use or disclosure of information

A CSLR staff member may use or disclose information or

documents obtained by the CSLR staff member under or for the

purposes of this Part if:

(a) the use or disclosure is for the purposes of:

(i) this Part; or

(ii) Part 7.10A; or

(iii) the

Financial Services Compensation Scheme of Last

Resort Levy Act 2021

; or

(iv) the

Financial Services Compensation Scheme of Last

Resort Levy (Collection) Act 2021

; or

(b) the use or disclosure is to:

(i) ASIC; or

(ii) AFCA; or

(iii) the Information Commissioner; or

(iv) the Commissioner of Taxation;

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for the purposes of assisting the entity or person to perform

its functions or exercise its powers.

1069F Reporting by CSLR operator

Reporting compensation payments

(1) If the CSLR operator pays an amount of compensation:

(a) to a person under section 1063; and

(b) for a relevant AFCA determination that required payment of

an amount by another person (the

AFCA member

) who is, or

was, a member of the AFCA scheme;

the CSLR operator must, as soon as reasonably practicable, notify

ASIC, in writing, of details about the AFCA member and the

AFCA member's failure to pay the amount required by the relevant

AFCA determination.

(2) If the CSLR operator:

(a) pays an amount of compensation:

(i) to a person under section 1063; and

(ii) for a relevant AFCA determination that required

payment of an amount by another person (the

AFCA

member

) who is, or was, a member of the AFCA

scheme; and

(b) becomes aware that the AFCA member is a Chapter 5 body

corporate while the determination is in force;

the CSLR operator must, as soon as reasonably practicable, notify

an officer of the Chapter 5 body corporate, in writing, of the

amount of compensation paid.

Reporting revised claims, fees and costs estimates that exceed cap

(3) If a revised claims, fees and costs estimate for a levy period and a

sub-sector comes into force that could cause the sub-sector levy

cap for the levy period and sub-sector to be exceeded (or further

exceeded), the CSLR operator must notify the Minister of this as

soon as practicable.

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(4) A notice to the Minister under subsection (3) must include the

information (if any) prescribed by regulations made for the

purposes of this subsection.

1069G Publishing reports

(1) The CSLR operator must, as soon as reasonably practicable after

the end of a levy period, prepare a report for the levy period that

contains information about the matters prescribed by regulations

made for the purposes of this subsection.

(2) The CSLR operator must publish the report on its website.

Subdivision C--Powers of the Minister

1069H Ministerial determination

Ministerial determination

(1) Subsection (2) applies if the Minister is notified under subsection

1069F(3) that a revised claims, fees and cost estimate for:

(a) a levy period; and

(b) a sub-sector (the

primary sub-sector

);

could cause the sub-sector levy cap for the levy period and the

primary sub-sector to be exceeded (or further exceeded).

(2) The Minister may, by legislative instrument, make a determination

for the levy period and the primary sub-sector dealing with one or

more of the matters mentioned in subsections (3) to (5).

Manner of payment

(3) A determination made under subsection (2) may provide that an

amount of compensation payable by the CSLR operator to a person

in a specified class of persons must be paid in specified instalments

over a specified period of time.

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Special levy for just the primary sub-sector

(4) For the purposes of paragraph 8(3)(b) of the

Financial Services

Compensation Scheme of Last Resort Levy Act 2021

, a

determination made under subsection (2) of this section may:

(a) specify that levy needs to be imposed by subsection 8(3) of

that Act for the levy period and the primary sub-sector; and

(b) specify the total amount of levy that needs to be imposed by

subsection 8(3) of that Act across all persons for the levy

period and the primary sub-sector, which must not exceed the

difference between:

(i) the revised claims, fees and costs estimate (referred to in

subsection (1) of this section) for the levy period and the

primary sub-sector; and

(ii) the total amount of levy already paid as worked out

under subsection (6) of this section.

Special levy for several sub-sectors not just the primary sub-sector

(5) For the purposes of paragraph 9(b) of the

Financial Services

Compensation Scheme of Last Resort Levy Act 2021

, a

determination made under subsection (2) of this section may:

(a) specify that levy needs to be imposed by section 9 of that Act

(

special levy

) for the levy period if the Minister is satisfied

that imposing special levy:

(i) is necessary due to the number of persons accepting

amounts of compensation under section 1069 of this Act

for the levy period and the primary sub-sector, and due

to the size of the sum of those amounts; and

(ii) is the most effective way of enabling payment of those

amounts to those persons in a timely manner; and

(b) for each of one or more specified sub-sectors--specify a total

amount of special levy that needs to be imposed for the levy

period across all members of the specified sub-sector if the

Minister has had regard to:

(i) the impact that imposing that total amount of special

levy may have on the financial sustainability and

viability of the specified sub-sector; and

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(ii) the impact that imposing that total amount of special

levy across all members of the specified sub-sector may

have on the financial system more broadly; and

under paragraph (b) of this subsection, which must not

exceed the difference between:

(i) the revised claims, fees and costs estimate (referred to in

subsection (1) of this section) for the levy period and the

primary sub-sector; and

(ii) the total amount of levy already paid as worked out

under subsection (6) of this section.

Working out the total amount of levy already paid

(6) For the purposes of subparagraph (4)(b)(ii) or (5)(c)(ii), work out

the sum of:

(a) the total amount of levy paid that was earlier imposed by

section 8 of the

Financial Services Compensation Scheme of

Last Resort Levy Act 2021

across all persons for the levy

period and the primary sub-sector; and

(b) the total amount of levy paid that was earlier imposed by

section 9 of that Act across all persons for all sub-sectors in

relation to any earlier revised claims, fees and costs estimate

for the levy period and the primary sub-sector.

Division 5--Regulating the CSLR operator

1069J Obligation to comply with mandatory requirements

The CSLR operator must ensure that the mandatory requirements

for the CSLR operator under section 1062 are complied with.

1069K ASIC may issue regulatory requirements

ASIC may, by legislative instrument, issue to the CSLR operator

regulatory requirements relating to compliance with the mandatory

requirements for the CSLR operator under section 1062.

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1069L General directions to CSLR operator

Notice of intention to issue a direction

(1) If ASIC considers that the CSLR operator has not done all things

reasonably practicable to ensure compliance with:

(a) the mandatory requirements for the CSLR operator under

section 1062; or

(b) a condition of the authorisation of the CSLR operator

imposed by the Minister (see paragraph 1060(4)(b)); or

ASIC may give the CSLR operator written notice that it intends to

give the CSLR operator a specified direction under this section.

(2) The notice must set out:

(a) the specific measures that the direction will require the CSLR

operator to take to comply with the requirements or

condition; and

(b) the reasons for ASIC's intention to give the direction.

Issuing a direction

(3) If, after receiving the notice:

(a) the CSLR operator does not take those specific measures;

and

(b) ASIC still considers that it is appropriate to give the direction

to the CSLR operator;

ASIC may give the CSLR operator the direction, in writing, with a

statement setting out the reasons for giving the direction.

(4) The direction must deal with the time by which, or the period

during which, it is to be complied with. The time or period must be

reasonable.

(5) A direction made under this section is not a legislative instrument.

Compliance

(6) The CSLR operator must comply with a direction made under this

section.

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Note:

Failure to comply with this subsection is an offence (see

subsection 1311(1)).

(7) If the CSLR operator fails to comply with the direction, ASIC may

apply to the Court for, and the Court may make, an order that the

CSLR operator comply with the direction.

Varying or revoking a direction

(8) ASIC may vary a direction made under this section by giving

written notice to the CSLR operator.

(9) The direction has effect until ASIC revokes it by giving written

notice to the CSLR operator.

(10) ASIC may revoke the direction, by giving written notice to the

CSLR operator, if, at the time of revocation, ASIC considers that

the direction is no longer necessary or appropriate.

Division 6--Financial matters

1069M Costs for first levy period

Estimate of costs for first levy period

(1) The CSLR operator may, by notifiable instrument made at any

time before the start of the first levy period, determine for the first

levy period and a sub-sector an estimate that is the sum of:

(a) the specified amount equal to what the CSLR operator

reasonably believes (having regard to actuarial principles)

will be the total amount of compensation payable under

section 1063:

(i) during the first levy period; and

(ii) for the sub-sector;

other than any such compensation relating to pre-CSLR

complaints; and

(b) the specified amount equal to what the CSLR operator

reasonably believes (having regard to actuarial principles)

will be the portion of the sum of the following that is

attributable to the sub-sector:

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(i) the sum of AFCA's unpaid fees expected for each of the

months in the first levy period, other than any such fees

relating to pre-CSLR complaints;

(ii) the sum of AFCA's unpaid fees expected for each of the

months ending on or after the accumulation recovery

day but before the first levy period, other than any such

fees relating to pre-CSLR complaints;

(iii) the capital reserve establishment contribution;

(iv) the CSLR operator's expected administrative costs for

the first levy period.

Note:

A single instrument may determine estimates for several sub-sectors.

(2) The notifiable instrument must include each of the amounts

referred to in subparagraphs (1)(b)(i) to (iv).

Reconciliation of costs for first levy period

(3) The CSLR operator may, by notifiable instrument and as soon as

reasonably practicable after the first levy period, determine the

revised costs for the first levy period and a sub-sector by

calculating the sum of the following amounts:

(a) the total amount of compensation paid under section 1063

during the first levy period for the sub-sector, other than any

such compensation relating to pre-CSLR complaints;

(b) the amount equal to the portion of the sum of the following

amounts that the CSLR operator reasonably believes (having

regard to actuarial principles) are attributable to the

sub-sector:

(i) the sum of AFCA's unpaid fees for each of the months

in the first levy period, other than any such fees relating

to pre-CSLR complaints;

(ii) the sum of AFCA's unpaid fees for each of the months

ending on or after the accumulation recovery day but

before the first levy period, other than any such fees

relating to pre-CSLR complaints;

(iii) the capital reserve establishment contribution;

(iv) the CSLR operator's administrative costs for the first

levy period.

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Note:

A single instrument may determine revised costs for several

sub-sectors.

1069N Payment to the CSLR operator of amount for the first levy

period for the scheme

(1) The Commonwealth must pay to the CSLR operator the amount

mentioned in subsection (2) for the first levy period for the

following purposes:

(a) the CSLR operator paying compensation under section 1063

during the first levy period, other than any such

compensation relating to pre-CSLR complaints;

(b) the CSLR operator paying AFCA's unpaid fees for each

month in the first levy period, other than any such fees

relating to pre-CSLR complaints;

month ending on or after the accumulation recovery day but

before the first levy period, other than any such fees relating

to pre-CSLR complaints;

(d) the CSLR operator establishing approximately one third of

the capital reserve (within the meaning of the

Financial

Services Compensation Scheme of Last Resort Levy

(Collection) Act 2021

);

(e) the CSLR operator paying the CSLR operator's

administrative costs for the first levy period.

(2) For the purposes of subsection (1), the amount is equal to the sum

of each estimate determined under subsection 1069M(1) for the

first levy period and a sub-sector.

1069P Payment to the CSLR operator of amounts equal to levy

(1) The Commonwealth must pay to the CSLR operator an amount

equal to each amount received by ASIC, on behalf of the

Commonwealth, by way of:

(a) levy (within the meaning of the

Financial Services

Compensation Scheme of Last Resort Levy (Collection) Act

2021

); or

(b) late payment penalty (within the meaning of that Act); or

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(2) The Consolidated Revenue Fund is appropriated for the purposes

of subsection (1).

1069Q Application of money by CSLR operator

(1) The money of the CSLR operator is to be applied only:

(a) to pay compensation under section 1063; and

(b) to pay AFCA's unpaid fees under section 1069B; and

1069C; and

(d) to pay the CSLR operator's administrative costs; and

(e) to reimburse to ASIC the costs that ASIC has notified to the

CSLR operator under subsection 9(4) of the

Financial

Services Compensation Scheme of Last Resort Levy

(Collection) Act 2021

; and

(f) to establish and restore the capital reserve (within the

meaning of the

Financial Services Compensation Scheme of

Last Resort Levy (Collection) Act 2021

(2) Subsection (1) does not prevent investment of money.

1069R Investment by CSLR operator

The CSLR operator must not invest money of the CSLR operator

unless:

(a) the money is not immediately required for the purposes

mentioned in paragraphs 1069Q(1)(a) to (e); and

(b) the money is invested:

(i) on deposit with an ADI (within the meaning of the

Banking Act 1959

), including a deposit evidenced by a

certificate of deposit; or

(ii) in securities of, or securities guaranteed by, the

Commonwealth, a State or a Territory.

1069S Recovery of overpayments

(1) If:

(a) the CSLR operator pays an amount of compensation to a

person under, or purportedly under, this Part; and

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(b) the amount paid exceeds the amount (if any) properly

payable to the person under this Part;

the amount of the excess is recoverable by the CSLR operator as a

debt due to the CSLR operator by action against the person in the

Federal Court or the Federal Circuit and Family Court of Australia

(Division 2).

(2) An amount equal to the excess may alternatively be deducted from

any other amount of compensation payable under this Part to, or

for the benefit of, the person.

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Part 2--Other amendments

Australian Securities and Investments Commission Act 2001

4 After paragraph 12A(1)(b)

Insert:

(ba) the

Financial Services Compensation Scheme of Last Resort

Levy (Collection) Act 2021

;

5 After subparagraph 127(4)(aa)(i)

Insert:

(ia) the CSLR operator (within the meaning of Chapter 7 of

the

Corporations Act 2001

);

Corporations Act 2001

6 After subsection 601AB(1B)

Insert:

(1C) ASIC may also decide to deregister a company if the company is

liable to pay levy (within the meaning of the

Financial Services

Compensation Scheme of Last Resort Levy (Collection) Act 2021

)

and the company has not paid in full at least 12 months after the

due date for payment:

(a) the amount of the levy; and

(b) the amount of any late payment penalty payable in relation to

the levy; and

levy.

7 After subsection 601AH(1A)

Insert:

(1B) ASIC may reinstate the registration of a company deregistered

under subsection 601AB(1C) if:

(a) ASIC receives an application in relation to the reinstatement

of the company's registration; and

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(b) the levy (within the meaning of the

Financial Services

Compensation Scheme of Last Resort Levy (Collection) Act

2021

) imposed on the company is paid in full; and

the levy is paid in full; and

(d) the amount of any shortfall penalty payable in relation to the

levy is paid in full.

8 After paragraph 915B(1)(f)

Insert:

; or (g) is liable to pay levy (within the meaning of the

Financial

Services Compensation Scheme of Last Resort Levy

(Collection) Act 2021

) and has not paid in full at least 12

months after the due date for payment:

(i) the amount of levy; and

(ii) the amount of any late payment penalty in relation to the

levy; and

(iii) the amount of any shortfall penalty payable in relation

to the levy.

9 After subsection 915B(1A)

Insert:

(1B) ASIC must cancel an Australian financial services licence held by

an individual, by giving written notice to the individual, if:

(a) the individual is required to pay an amount to another person

in accordance with a relevant AFCA determination; and

(b) the CSLR operator has paid, under section 1063, an amount

of compensation to the other person for the relevant AFCA

determination.

10 After paragraph 915B(2)(e)

Insert:

; or (f) in the case of a partnership that is liable to pay levy (within

the meaning of the

Financial Services Compensation Scheme

of Last Resort Levy (Collection) Act 2021

)--the following

have not been paid in full at least 12 months after the due

date for payment:

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(i) the amount of levy;

(ii) the amount of any late payment penalty in relation to the

levy;

(iii) the amount of any shortfall penalty payable in relation

to the levy.

11 After subsection 915B(2A)

Insert:

(2B) ASIC must cancel an Australian financial services licence held by

a partnership, by giving written notice to the partnership, if:

(a) one or more of the partners is required to pay an amount to a

person in accordance with a relevant AFCA determination;

and

(b) the CSLR operator has paid, under section 1063, an amount

of compensation to the person for the relevant AFCA

determination.

12 After paragraph 915B(3)(e)

Insert:

; or (f) the body is liable to pay levy (within the meaning of the

Financial Services Compensation Scheme of Last Resort

Levy (Collection) Act 2021

) and has not paid in full at least

12 months after the due date for payment:

(i) the amount of levy; and

(ii) the amount of any late payment penalty in relation to the

levy; and

(iii) the amount of any shortfall penalty payable in relation

to the levy.

13 After subsection 915B(3A)

Insert:

(3B) ASIC must cancel an Australian financial services licence held by

a body corporate, by giving written notice to the body, if:

(a) the body is required to pay an amount to a person in

accordance with a relevant AFCA determination; and

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(b) the CSLR operator has paid, under section 1063, an amount

of compensation to the person for the relevant AFCA

determination.

14 After paragraph 915B(4)(e)

Insert:

; or (f) in the case of a licensee that is a single legal entity under

section 761FA of this Act and also liable to pay levy (within

the meaning of the

Financial Services Compensation Scheme

of Last Resort Levy (Collection) Act 2021

)--the following

have not been paid in full at least 12 months after the due

date for payment:

(i) the amount of levy;

(ii) the amount of any late payment penalty in relation to the

levy;

(iii) the amount of any shortfall penalty payable in relation

to the levy.

15 At the end of section 915B

Add:

(4B) ASIC must cancel an Australian financial services licence held by

the trustees of a trust, by giving written notice to the trustees, if:

(a) the trustees of the trust are required to pay an amount to a

person in accordance with a relevant AFCA determination;

and

(b) the CSLR operator has paid, under section 1063, an amount

of compensation to the person for the relevant AFCA

determination.

16 After paragraph 920A(1)(j)

Insert:

(ja) all of the following apply:

(i) an individual who holds an Australian financial services

licence, a partner in a partnership, a body corporate or a

trustee of a trust is required to pay an amount in

accordance with a relevant AFCA determination;

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(ii) the CSLR operator has paid, under section 1063, an

amount of compensation for the relevant AFCA

determination;

(iii) at the time the payment is made by the CSLR operator,

the person is the individual licensee, a partner in the

partnership, an officer of the body corporate or the

trustee of the trust; or

17 After paragraph 1317C(gdc)

Insert:

(gdca) a decision by ASIC under subsection 915B(1B), (2B), (3B)

or (4B) (immediate cancellation of an Australian financial

services licence); or

18 In the appropriate position in Schedule 3

Insert:

Subsection 1069L(6)

(a) for an individual--100 penalty units for each

day, or part of a day, in respect of which the

offence is committed; and

(b) for a body corporate--1,000 penalty units

for each day, or part of a day, in respect of

which the offence is committed

National Consumer Credit Protection Act 2009

19 At the end of subsection 54(1)

Add:

; or (e) in the case of a licensee that is liable to pay levy (within the

meaning of the

Financial Services Compensation Scheme of

Last Resort Levy (Collection) Act 2021

)--the following have

not been paid in full at least 12 months after the due date for

payment:

(i) the amount of levy;

(ii) the amount of any late payment penalty in relation to the

levy;

(iii) the amount of any shortfall penalty payable in relation

to the levy.

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20 After subsection 54(1A)

Insert:

(1B) ASIC must cancel a licensee's licence if:

(a) the licensee is required to pay an amount to a person in

accordance with a relevant AFCA determination (within the

meaning of Chapter 7 of the

Corporations Act 2001

); and

(b) the CSLR operator (within the meaning of that Chapter) has

paid, under section 1063 of that Act, an amount of

compensation to the person for the relevant AFCA

determination.

21 After paragraph 80(1)(fb)

Insert:

(fba) if all of the following apply:

(i) an individual who holds a licence, a partner in a

partnership, a body corporate or a trustee of a trust is

required to pay an amount in accordance with a relevant

AFCA determination (within the meaning of Chapter 7

of the

Corporations Act 2001

);

(ii) the CSLR operator (within the meaning of that Chapter)

has paid, under section 1063 of that Act, an amount of

compensation for the relevant AFCA determination;

(iii) at the time the payment is made by the CSLR operator,

the person is the individual licensee, a partner in the

partnership, an officer (within the meaning of that Act)

of the body corporate or the trustee of the trust; or

22 Before paragraph 327(1)(a)

Insert:

(aa) a decision of ASIC under subsection 54(1B) (which deals

with immediate cancellation of a licence); or

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