APRA has made the Financial Sector (Shareholdings) Rules 2019 (FSSA Rules) that set out the matters that must be considered in determining if a person is “fit and proper” for the purposes of the Financial Sector (Shareholdings) Act 1998 (FSSA).

Under section 13 of the FSSA, a person applying for approval to hold a stake of more than 20 per cent in a financial sector company may apply for approval under a ‘national interest’ test or by satisfying the decision-maker that the applicant is a fit and proper person.

The FSSA has a new streamlined “fit and proper” test for shareholders of new or recently established authorised deposit-taking institutions and life insurers with assets below $200 million, and general insurers with assets below $50 million.

Applications based solely on fitness and propriety were introduced into the Act by the Treasury Laws Amendment (Financial Sector Regulation) Act 2018 from 1 April 2019. This is a streamlined approval path that is limited to the holding of a stake in a new or recently established domestically-incorporated authorised deposit-taking institution, general insurer or life company with assets below the relevant threshold, or a 100 per cent holding company of such an entity.

Under the streamlined approval path, applicants are not assessed against the national interest framework. Approvals granted under the streamlined path will require the holder of the approval to provide relevant information to APRA annually.