Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

Today I introduce this bill to amend the Corporations Act 2001 (Corporations Act) and the Payment System (Regulation) Act 1998.

By way of background information, the Corporations Legislation Amendment (Financial Services Modernisation) Act 2009, which commenced on 6 May 2010, inserted a new chapter into the Corporations Act—chapter 5D—that created a new national uniform regime for regulating trustee companies.

A trustee company provides a wide range of wealth management services including estate planning, administering deceased estates, managing the financial affairs of persons unable to look after their own interests, and administering charitable trusts and foundations. There are currently 11 licensed private trustee companies in Australia.

Since the commencement of the new national regime, the government has received representations from the industry, in particular the representative association—the Trustee Corporations Association of Australia—and the state and territory governments indicating that a number of amendments are required to increase market efficiency by ensuring restructuring of company groups which operated under the state and territory based regulatory framework.

This bill demonstrates our government’s understanding of the ongoing requirement to consult stakeholders on new and old regulatory regimes to ensure that policy objectives and outcomes are being met and to continually review and improve these regulatory regimes where appropriate so that all relevant parties are aware of their public policy obligations and requirements. And also, we do this to confirm that the government’s intended social and economic benefits are being delivered to the community—in other words, to check that the wellbeing of the Australian society is being enhanced.

This bill contains a number of measures to improve the operation of chapter 5D of the Corporations Act. This bill provides for the voluntary transfer of trustee business between entities. Prior to the commencement of chapter 5D, many corporate groups operated multiple subsidiaries in order to comply with the former state and territory regimes. The industry is now seeking a feasible and cost-effective process for consolidating the business of these subsidiaries into one Commonwealth licensed entity.

The bill provides for ‘compulsory’ transfers of trustee company business from a failing licensed trustee company to a state or territory public trustee. Currently, chapter 5D of the Corporations Act precludes the transfer of trustee company business from a licence-cancelled company to a state or territory public trustee because the public trustees are not licensed trustee companies. It is appropriate and important for the purpose of protecting the assets and stakeholders of failing or demonstrably noncompliant licensed trustee companies to rectify this situation.

At present, there is no formal procedure under which a prospective licensee applies to the government to be listed as a licensed trustee corporation. This contrasts with the former state based system where most jurisdictions published administrative (rather than legislative) criteria for applicants. This bill provides such a process.

To preserve the integrity of the new regime in chapter 5D and to prevent misrepresentations to the public, the bill provides that an entity is prohibited from holding itself out as a ‘licensed trustee company’ unless it holds an AFSL with a trustee company authorisation.

Finally, the bill would also amend the Payment System (Regulation) Act 1998 to protect participants in the automatic teller machine (ATM) system from prosecution under the Competition and Consumer Act 2010.

This amendment is necessary because the Payment Systems (Regulation) Regulations 2006, which protect participants in the ATM system, sunsets in March 2011, as regulations made for the purposes of subparagraph 51(1)(a)(ii) of the Competition and Consumer Act 2010 (formerly called the Trade Practices Act 1974) last for two years. To allow ATM participants to continue to comply with the Reserve Bank of Australia’s ATM reforms, a legislative change to the Payment System (Regulation) Act 1998 is required.

The Ministerial Council for Corporations has been consulted in relation to the amendments to the Corporations Act and has approved the trustee company amendments contained in this bill.

Debate (on motion by Mr Andrews) adjourned.