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Mandatory Comparison Rates Update
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Two new enforcement policies were released on 11 June.

In summary, the new rulings provide as follows:

* A Comparison Rate Schedule (CRS) may state which repayment frequency has been used to calculate CR (ie weekly, fortnightly, or monthly).

* The law already provided that certain premises of lenders did not need to display and have available CRSs. This exemption has now been extended to provide that a CRS need not be sent with an application form issued from those exempt premises.

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APRA Amendment Bill introduced
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The Australian Prudential Regulation Authority Amendment Bill 2003 was introduced in the House of Representatives on 5 June 2003.

The Bill implements the Government's response to certain recommendations made by the HIH Royal Commissioner. It implements an enhanced governance structure for the Australian Prudential Regulation Authority (APRA) and responds to a number of other recommendations aimed at enhancing APRA's ability to share information and co-operate effectively with other financial sector supervisory agencies, law enforcement agencies and overseas regulatory authorities.

In particular the Bill will replace the APRA board (including its CEO and ex officio members) with a full-time executive group comprising at least 3 and no more than 5 members. The executive group will carry the responsibility and be accountable for the operation and performance of APRA. APRA will retain its status as an independent statutory authority.

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APRA Fees for new ADI's
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The Australian Prudential Regulation Authority (APRA) has introduced licence fees for new authorised deposit-taking institutions (ADIs), general insurance companies and life insurance companies, including friendly societies. The statutory instrument imposing the fees was published on 3 June.

Licence fees for superannuation funds will be introduced when the Government’s new licensing regime is launched, currently scheduled for mid 2004.

The fee for each type of licence reflects APRA’s costs of processing and determining a licence application from a prospective new entrant to the prudentially supervised finance sector.

The fixed fees (inclusive of GST) for licence applications are as follows:

1. ADI

bank or special service provider $68,200
building society or credit union $22,000
specialist credit card institution $33,000
2. General insurer $68,200

3. Life company

Non-friendly society $55,000
Friendly society $22,000

APRA’s Chief Executive Officer, Mr Graeme Thompson, said that licensing is a critically important element in prudential regulation.

“It ensures that entities being established under APRA’s supervisory regime have the requisite starting capital and sound risk management processes in place.”

Mr Thompson said that in the past, licence processing costs had been recouped from the annual supervisory levy paid by established institutions.

“It is fairer for those costs to be borne by the applicant, who will obtain the benefit of the licence, rather than being subsidised by the general body of supervised institutions through the annual levy,” he said.

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