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APRA releases revised proposals for Financial Claims Scheme

by Hilary Kincaid 31. August 2010 11:21

APRA has released a response paper and draft reporting standard as part of the second round of consultation in relation to the implementation of a Financial Claims Scheme for authorised deposit-taking institutions (ADIs).

The FCS was established in October 2008 and is designed to provide some protection to depositors if their ADI is placed into liquidation in insolvency.

The response paper outlines key issues arising from submissions received in response to the consultation paper issued in January 2010. APRA has made some modifications to its proposals in response to those submissions: 

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

Submissions on the reporting standard and response paper are due by 15 October 2010. Subject to those submissions, APRA intends to release the final reporting standard in late 2010, to take effect from 1 April 2011. The consultation package is available on the official APRA site.

Once the standard is in effect (and after the relevant transitional period is over), ADIs will be required to report scheme-related data in a prescribed format to APRA forthwith following a request to that effect. There will also be periodic testing of ADIs' responsiveness.

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