Single bank account for statutory fundsSingle bank account for statutory funds

Single bank account for statutory funds

21. For the purposes of subsection 34(4) of the Act, the bank account must be maintained in accordance with the following standards:

(a) A statutory fund account must be established in the records of the life company in respect of each statutory fund in respect of which the bank account is maintained.

(b) The statutory fund account must be a current account (or ledger) that records, as accounting entries, drawings from and receipts by the bank account in respect of the statutory fund.

(c) The drawings and receipts must be balanced by offsetting entries in both the bank account and the statutory fund account.

(d) The balancing must be carried out not less frequently than once every 7 days, except that:

(i) in the case of drawings or receipts relating to investment-linked contracts, the balancing must be carried out not less frequently than the frequency at which the unit prices relevant to the contract concerned are quoted by the person managing the unitised investment concerned, and in any event not less frequently than once every 7 days;

(ii) in the case of drawings or receipts of amounts that are less than or equal to the greater of:

(A) $500,000; or

(B) 1% of the value of the assets of the statutory fund as last reported to APRA; the balancing may be carried out not less frequently than once every 28 days.

(e) A debit balance in the statutory fund account must be recorded as a “sundry debtor”, and a credit balance as a “sundry creditor”.

(f) Interest must accrue daily on any balance (whether credit or debit) in the statutory fund account, at a rate that the company believes, on reasonable grounds, is fair and reasonable to the policyholders whose policies are referable to the statutory fund having regard to the interest earned by the bank account.

(g) The net position of all the statutory fund accounts in aggregate must be reconciled not less frequently than once every 28 days. When so reconciled the net position must be equal to the balance of the bank account at that time.

(h) If, at any time, the balance (whether credit or debit) in a statutory fund account comes to exceed the greater of:

(i) $500,000; or

(ii) 1% of the value of the assets of the statutory fund as last reported to APRA;

the company must, in writing, within 28 days after that time, tell APRA and give APRA particulars of the transactions that caused the balance to exceed the applicable amount.