Notice - Draft Statement of Principles on the Use of Enforcement Powers (Insurance Amendment Act 2012)

Summary

This is a BMA Notice attaching a draft Statement of Principles (SoP) describing how the Authority intends to use enforcement powers being added to the Insurance Act 1978, and anticipated to be mirrored across other financial sector Acts. It is a consultation document, not yet in force, published to help industry understand upcoming enforcement amendments before they are enacted.

The draft SoP explains the Authority's general approach: most compliance issues will be handled through normal supervision, with escalation to an Enforcement Committee reserved for material non-compliance. It sets out the principles, factors and options the Authority would apply once the enabling legislation is enacted and the SoP formally adopted.

• Scope of anticipated legislation: Amendments introducing new enforcement powers are anticipated under the Insurance Act 1978, Banks and Deposit Companies Act 1999, Investment Business Act 2003, Trusts (Regulation of Trust Business) Act 2001 and Investment Funds Act 2006, plus a new Corporate Service Provider Act.
• Enforcement process: Breaches identified by supervisory departments may be referred to the Enforcement Committee, which decides whether enforcement action is appropriate and which option to use, guided by listed factors such as nature, gravity, impact, compliance history and deterrence.
• Enforcement options described: Directions, restrictions and conditions; civil penalties (including a proposed cap of $5,000 per week for late statutory filings and up to $500,000 per breach for other contraventions); injunctions; public censure; objections to controllers; prohibition orders against directors/officers; licence revocation; winding up; and referral to police.
• Publication and appeals: The draft describes the Authority's proposed approach to publicising enforcement decisions and confirms that certain actions (licence revocation, action against controllers/directors, prohibition orders, civil penalties, licence conditions/restrictions, and public censure) would carry a right of appeal to a Tribunal.

Because this is a draft published for consultation, it does not itself create binding obligations on licensees; it previews how the Authority intends to exercise powers once the underlying legislative amendments are enacted and the SoP is formally adopted.

Applies to

insurers and other licensees under the Insurance Act 1978, banks and deposit companies, investment business licensees, trust companies (licensees under the Trusts (Regulation of Trust Business) Act 2001), investment funds, corporate service providers (anticipated under a new Act)