The long-awaited paper outlining how the Federal Government plans to deal with direct offshore foreign insurers (DOFIs) will be released by the end of the year, according to the Federal Treasury.

The department commissioned former Executive Director Gary Potts to conduct a review into discretionary mutual funds (DMFs) and DOFIs in September 2003, after HIH Royal Commissioner Justice Neville Owen mentioned them in his report.

It released the key findings of Mr Potts’ report in May last year, saying it would implement all his recommendations. Its initial indication was it would release the paper in September, but that has now been back a few months.

Key recommendations of the Potts review had a broad outlook. It recommended DOFIs be allowed to continue to be exempt from Australian Prudential Regulation Authority (APRA) regulatory provisions if the regulator says the company operates in a country with “comparable prudential regulation, subject to a market significance threshold to prevent… insurers moving offshore”.

Mr Potts also recommended APRA be given “enhanced enforcement and investigative powers” to establish the nature of DOFIs, and assume a DOFI data collection role.

Treasury spokesman Vicky Wilkinson told Sunrise Exchange News the department “hopes to release a discussion paper by the end of the year”. She didn’t indicate why the paper was delayed.

“The discussion paper looks at the Potts recommendations and will discuss the implementation of the recommendations,” she said.