Financial Sector (Collection of Data) (reporting standard) determination No. 40 of 2006 Reporting Standard ARS 394.0 Personal Finance (Cth)

Case

Financial Sector (Collection of Data) (reporting standard) determination No. 40 of 2006

Reporting standard ARS 394.0 Personal Finance

Financial Sector (Collection of Data) Act 2001

I, Charles Watts Littrell, a delegate of APRA, under paragraph 13(1)(a) of the Financial Sector (Collection of Data) Act 2001 (the Act) and subsection 33(3) of the Acts Interpretation Act 1901:

  • REVOKE the Reporting Standard ARS 394.0 (2005) Personal Finance; and

  • DETERMINE the Reporting standard ARS 394.0 Personal Finance in the form set out in the Schedule, which applies to the financial sector entities referred to in paragraph 2 of the reporting standard.

Under section 15 of the Act, I DECLARE that the reporting standard shall begin to apply to those financial sector entities on the later of 1 July 2006 and the date of registration on the Federal Register of Legislative Instruments.

Dated  26 June 2006

[signed]

Charles Littrell

Executive General Manager

Policy, Research and Statistics

APRA

Interpretation

In this Determination

APRA means the Australian Prudential Regulation Authority.

Schedule    

Reporting standard ARS 394.0 Personal Finance comprises 49 pages commencing on the next page.

Reporting Standard ARS 394.0

Personal Finance

Objective of this reporting standard

This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001. It requires all authorised deposit-taking institutions, except locally-incorporated special service providers and specialist credit card institutions that only engage in acquiring business, to report to APRA, generally on a monthly basis, in relation to their personal finance.

This reporting standard outlines the overall requirements for the provision of relevant information to APRA. It should be read in conjunction with:

  • Form ARF 394.0.1 Personal Finance in NSW;

  • Form ARF 394.0.2 Personal Finance in VIC;

  • Form ARF 394.0.3 Personal Finance in QLD;

  • Form ARF 394.0.4 Personal Finance in SA;

  • Form ARF 394.0.5 Personal Finance in WA;

  • Form ARF 394.0.6 Personal Finance in TAS;

  • Form ARF 394.0.7 Personal Finance in the NT; and

  • Form ARF 394.0.8 Personal Finance in the ACT,

and the associated instructions (all of which are attached and form part of this reporting standard).

Purpose

  1. Data collected in Forms ARF 394.0.1 to 394.0.8 is used by APRA for the purpose of prudential supervision. It may also be used by the Reserve Bank of Australia and the Australian Bureau of Statistics.

Application and commencement

  1. This reporting standard applies to all authorised deposit-taking institutions (ADIs) except:

(a)locally-incorporated special service providers; and

(b)specialist credit card institutions (whether locally-incorporated or not) that do not engage in any credit card issuing.

Information required

  1. An ADI that is a:

(a)locally-incorporated bank; or

(b)foreign ADI (other than a specialist credit card institution)

must complete each of Forms ARF 394.0.1 to 394.0.8 on a domestic books basis for each reporting period.

  1. An ADI that is:

(a)a locally-incorporated building society;

(b)a locally-incorporated credit union;

(c)a specialist credit card institution that engages in credit card issuing; or

(d)Cairns Penny Savings & Loans Limited

must complete each of Forms ARF 394.0.1 to 394.0.8 on a licensed ADI basis for each reporting period.

Forms and method of submission

  1. The information required by this reporting standard must be given to APRA either:

(a)in electronic form, using one of the electronic submission mechanisms provided by the ‘Direct to APRA’ (also known as ‘D2A’) application; or

(b)manually completed on paper, which must be faxed or mailed to APRA’s head office.

Note: the Direct to APRA application software and paper forms may be obtained from APRA.

Reporting periods and due dates

  1. Subject to paragraph 7, the information required by this reporting standard must be provided in respect of each calendar month.

  1. APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular ADI, to require it to provide the information required by this reporting standard more frequently, or less frequently, having regard to:

(a)the particular circumstances of the ADI;

(b)the extent to which the information is required for the purposes of the prudential supervision of the ADI; and

(c)the requirements of the Reserve Bank of Australia or the Australian Bureau of Statistics.

  1. The information required by this reporting standard must be provided to APRA by 10 business days after the end of the reporting period to which it relates.

  1. APRA may grant an ADI an extension of a due date in writing in which case the new due date for the provision of the information will be the date on the notice of extension.

Authorisation

  1. All information provided by an ADI under this reporting standard must be subject to processes and controls developed by the ADI for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the ADI to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.

  1. If an ADI submits information under this reporting standard using the ‘Direct to APRA’ software, it will be necessary for an officer of the ADI to digitally sign, authorise and encrypt the relevant data. For this purpose, APRA’s certificate authority will issue ‘digital certificates’, for use with the software, to officers of the ADI who have authority from the ADI to transmit the data to APRA.

  1. If information under this reporting standard is provided in paper form, it must be signed on the front page of the relevant completed form by either:

(a)the Principal Executive Officer of the ADI; or

(b)the Chief Financial Officer of the ADI (whatever his or her official title may be).

Minor alterations to forms and instructions

  1. APRA may make minor variations to:

(a)a form that is part of this reporting standard, and the instructions to such a form, to correct technical, programming or logical errors, inconsistencies or anomalies; or

(b)the instructions to a form, to clarify their application to the form

without changing any substantive requirement in the form or instructions.

  1. If APRA makes such a variation it must notify in writing each ADI that is required to report under this reporting standard.

Transitional

  1. An ADI must report under the old reporting standard in respect of a transitional reporting period. For these purposes:

old reporting standard means the reporting standard revoked in the determination making this reporting standard (being the reporting standard which this reporting standard replaces).

transitional reporting period means a reporting period under the old reporting standard:

(a)which ended before the date of revocation of the old reporting standard; and

(b)in relation to which the ADI was required, under the old reporting standard, to report by a date on or after the date of revocation of the old reporting standard.

Interpretation - classifications of ADIs

  1. In this reporting standard:

ADI means an authorised deposit-taking institution within the meaning of the Banking Act 1959.

ADI list means the attached ADI list.

building society means an ADI whose name appears under the heading ‘Building Societies’ in the ADI list.

credit union means an ADI whose name appears under the heading ‘Credit Unions’ in the ADI list.

foreign ADI means an ADI that is not incorporated in Australia.

locally-incorporated means incorporated in Australia.

locally-incorporated bank means an ADI whose name appears under the heading ‘Australian-owned Banks’ or ‘Foreign Subsidiary Banks’ in the ADI list.

special service provider means an ADI whose name appears under the heading ‘Other ADIs’ in the ADI list (other than the Cairns Penny Savings & Loans Limited).

specialist credit card institution means an ADI whose name appears under the heading ‘Specialist Credit Card Institutions (SCCIs)’ in the ADI list.

  1. If an ADI is not in the ADI list, then:

(a)if the ADI assumes or uses the word ‘bank’ in relation to its financial business, and it is locally-incorporated, it is taken to be a locally-incorporated bank for the purposes of this reporting standard; and

(b)if the ADI assumes or uses the expression ‘building society’ in relation to its financial business, and it is locally-incorporated, it is taken to be a locally-incorporated building society for the purposes of this reporting standard;

(c)if the ADI assumes or uses the expression ‘credit union’, ‘credit society’ or ‘credit co-operative’ in relation to its financial business, and it is locally-incorporated, it is taken to be a locally-incorporated credit union for the purposes of this reporting standard; and

(d)if the ADI engages in credit card issuing or credit card acquiring, or both, and does not otherwise carry on banking business within the meaning of section 5 of the Banking Act 1959, it is taken to be a specialist credit card institution for the purposes of this reporting standard

  1. APRA may in writing determine that an ADI is taken to be a locally-incorporated bank, locally-incorporated building society, locally-incorporated credit union, locally-incorporated special service provider or specialist credit card institution for the purposes of this reporting standard (even if, under paragraph 16 or 17, it comes within a different classification).

Interpretation - other definitions

  1. In this reporting standard:

business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays.

Principal Executive Officer means the principal executive officer of the ADI for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the entity.

reporting period means a reporting period under paragraph 6 or, if applicable, paragraph 7.

The ADI list

Australian-owned Banks

  • Adelaide Bank Limited

  • AMP Bank Limited

  • Australia and New Zealand Banking Group Limited

  • Bank of Queensland Limited

  • Bendigo Bank Limited

  • Commonwealth Bank of Australia

  • Commonwealth Development Bank of Australia Limited (a subsidiary of Commonwealth Bank of Australia)

  • Elders Rural Bank Limited

  • Macquarie Bank Limited

  • Members Equity Bank Pty Limited

  • National Australia Bank Limited

  • St George Bank Limited

  • Suncorp-Metway Limited

  • Westpac Banking Corporation

Foreign Subsidiary Banks

  • Arab Bank Australia Limited

  • Bank of China (Australia) Limited

  • Bank of Cyprus Australia Pty Limited

  • BankWest (the trading name of Bank of Western Australia Limited, a foreign subsidiary bank following its sale to Bank of Scotland in December 1995)

  • Citigroup Pty Limited

  • HSBC Bank Australia Limited

  • ING Bank (Australia) Limited

  • Investec Bank (Australia) Limited

  • Laiki Bank (Australia) Limited

  • NM Rothschild & Sons (Australia) Limited

  • Rabobank Australia Limited (a subsidiary of Rabobank Nederland from October 1994)

Branches of Foreign Banks

  • ABN AMRO Bank N.V.

  • Bank of America, National Association

  • Bank of China (subject to depositor protection provisions of the Banking Act 1959)

  • Bank of Tokyo-Mitsubishi UFJ, Ltd

  • Barclays Capital (the trading name of Barclays Bank plc)

  • BNP Paribas

  • Citibank N.A.

  • Credit Suisse

  • Deutsche Bank AG

  • HBOS Treasury Services plc

  • HSBC Bank plc

  • ING Bank NV

  • JPMorgan Chase Bank, National Association

  • Mizuho Corporate Bank, Ltd

  • Oversea-Chinese Banking Corporation Limited

  • Rabobank Nederland (the trading name of Co-operative Central Raiffeisen-Boerenleenbank B.A.)

  • Royal Bank of Canada

  • Société Générale

  • Standard Chartered Bank

  • State Bank of India

  • State Street Bank and Trust Company

  • The International Commercial Bank of China

  • The Royal Bank of Scotland Plc

  • The Toronto-Dominion Bank

  • Taiwan Business Bank

  • UBS AG

  • United Overseas Bank Limited

  • WestLB AG

Building Societies

  • ABS Building Society Ltd

  • B & E Ltd

  • Greater Building Society Ltd

  • Heritage Building Society Limited

  • Home Building Society Ltd

  • Hume Building Society Ltd

  • IMB Ltd

  • Lifeplan Australia Building Society Limited

  • Mackay Permanent Building Society Ltd

  • Maitland Mutual Building Society Limited

  • Newcastle Permanent Building Society Ltd

  • Pioneer Permanent Building Society Limited

  • The Rock Building Society Limited

  • Wide Bay Australia Ltd

Credit Unions

  • Alliance One Credit Union Ltd

  • AMP Employees' & Agents Credit Union Limited

  • Austral Credit Union Limited

  • Australian Central Credit Union Limited

  • Australian Country Credit Union Ltd (trading as Reliance Credit Union)

  • Australian Defence Credit Union Ltd

  • AWA Credit Union Limited

  • Bananacoast Community Credit Union Ltd

  • Bankstown City Credit Union Ltd

  • Berrima District Credit Union Ltd

  • Big Sky Credit Union Ltd

  • Blue Mountains and Riverlands Community Credit Union Ltd

  • Broadway Credit Union Ltd

  • Calare Credit Union Ltd

  • CAPE Credit Union Limited

  • Capital Credit Union Ltd

  • Capricornia Credit Union Ltd

  • Carboy (SA) Credit Union Limited

  • Central Murray Credit Union Limited

  • Central West Credit Union Limited

  • Circle Credit Co-operative Limited

  • Coastline Credit Union Limited

  • Collie Miners Credit Union Ltd

  • Community Alliance Credit Union Limited

  • Community CPS Australia Limited

  • Community First Credit Union Limited

  • Companion Credit Union Limited

  • Comtax Credit Union Limited

  • Connect Credit Union of Tasmania Limited

  • Country First Credit Union Ltd

  • CPS Credit Union Co-operative (ACT) Limited

  • Credit Union Australia Ltd

  • Credit Union Incitec Pivot Limited

  • Croatian Community Credit Union Limited

  • CSR and Rinker Employees Credit Union Limited

  • Dairy Farmers Credit Union Ltd

  • Defence Force Credit Union Limited

  • Discovery Credit Union Ltd

  • Dnister Ukrainian Credit Co-operative Limited

  • ELCOM Credit Union Ltd

  • Electricity Credit Union Ltd

  • Encompass Credit Union Limited

  • Ericsson Employees Credit Co-operative Limited

  • Esso Employees' Credit Union Ltd

  • Eurobodalla Credit Union Ltd

  • Family First Credit Union Limited

  • Fire Brigades Employees' Credit Union Limited

  • Fire Service Credit Union Limited

  • Firefighters & Affiliates Credit Co-operative Limited

  • First Option Credit Union Limited

  • First Pacific Credit Union Limited

  • Fitzroy & Carlton Community Credit Co-operative Limited

  • Ford Co-operative Credit Society Limited

  • Gateway Credit Union Ltd

  • Geelong & District Credit Co-operative Society Limited

  • GMH (Employees) Q.W.L. Credit Co-operative Limited

  • Goldfields Credit Union Ltd

  • Gosford City Credit Union Ltd

  • Goulburn Murray Credit Union Co-operative Limited

  • H.M.C. Staff Credit Union Ltd

  • Heritage Isle Credit Union Limited

  • Hibernian Credit Union Limited

  • Holiday Coast Credit Union Ltd

  • Horizon Credit Union Ltd

  • Hoverla Ukrainian Credit Co-operative Ltd

  • Hunter Mutual Limited

  • Hunter United Employees' Credit Union Limited

  • Industries Mutual Credit Union Limited

  • Intech Credit Union Limited

  • Island State Credit Union Ltd

  • Karpaty Ukrainian Credit Union Limited

  • La Trobe Country Credit Co-operative Limited

  • La Trobe University Credit Union Co-operative Limited

  • Laboratories Credit Union Ltd

  • Latvian Australian Credit Co-operative Society Limited

  • Lithuanian Co-operative Society (Talka) Limited

  • Lysaght Credit Union Ltd

  • MacArthur Credit Union Ltd

  • Macaulay Community Credit Co-operative Limited

  • Macquarie Credit Union Limited

  • Maleny and District Community Credit Union Limited

  • Manly Warringah Credit Union Ltd

  • Maritime Workers of Australia Credit Union Ltd

  • Maroondah Credit Union Ltd

  • MECU Limited

  • Melbourne University Credit Union Limited

  • Memberfirst Credit Union Limited

  • New England Credit Union Ltd

  • Newcom Colliery Employees' Credit Union Ltd

  • Northern Inland Credit Union Ltd

  • Nova Credit Union Limited

  • NSW Teachers Credit Union Ltd

  • Old Gold Credit Union Co-operative Limited

  • Orana Credit Union Ltd

  • Orange Credit Union Limited

  • Phoenix (NSW) Credit Union Ltd

  • Plenty Credit Co-operative Limited

  • Police & Nurses Credit Society Limited

  • Police Association Credit Co-operative Limited

  • Police Credit Union Limited

  • Polish Community Credit Union Ltd

  • Power Credit Union Limited

  • Powerstate Credit Union Ltd

  • Pulse Credit Union Limited

  • Qantas Staff Credit Union Limited

  • Queensland Community Credit Union Limited

  • Queensland Country Credit Union Ltd

  • Queensland Police Credit Union Limited

  • Queensland Professional Credit Union Ltd

  • Queensland Teachers' Credit Union Limited

  • Queenslanders Credit Union Limited

  • Railways Credit Union Limited

  • RegionalOne Credit Union Limited

  • Resources Credit Union Limited

  • RTA Staff Credit Union Limited

  • Satisfac Direct Credit Union Limited

  • Savings and Loans Credit Union (S.A.) Ltd

  • Security Credit Union Ltd

  • Select Credit Union Ltd

  • Service One Credit Union Ltd

  • SGE Credit Union Limited

  • Shell Employees' Credit Union Limited

  • South West Slopes Credit Union Ltd

  • Southern Cross Credit Union Limited

  • South-West Credit Union Co-operative Limited

  • St Mary's Swan Hill Co-operative Credit Society Limited

  • St Patrick's Mentone Co-operative Credit Society Limited

  • Statewest Credit Society Limited

  • Sutherland Credit Union Ltd

  • Sutherland Shire Council Employees' Credit Union Ltd

  • Sydney Credit Union Ltd

  • Tartan Credit Union Ltd

  • The Broken Hill Community Credit Union Ltd

  • The Gympie Credit Union Ltd

  • The Police Department Employees' Credit Union Limited

  • The Summerland Credit Union Limited

  • The TAFE and Community Credit Union Limited

  • The University Credit Society Limited

  • Traditional Credit Union Limited

  • TransComm Credit Co-operative Limited

  • Uni Credit Union Ltd

  • United Credit Union Limited

  • Victoria Teachers Credit Union Limited

  • Wagga Mutual Credit Union Ltd

  • Warwick Credit Union Ltd

  • WAW Credit Union Co-operative Limited

  • Westax Credit Society Ltd

  • Western City Credit Union Ltd

  • Woolworths/Safeway Employees' Credit Co-operative Limited

  • Wyong Council Credit Union Ltd

  • Yennora Credit Union Ltd

Specialist Credit Card Institutions (SCCIs)

Foreign-owned SCCIs

  • GE Capital Finance Australia

  • GE Finance Australasia Pty Ltd

Locally Incorporated SCCIs

  • MoneySwitch Limited

Other ADIs

These companies are run by industry bodies and provide services (eg payments clearing) to member building societies and credit unions.

  • Australian Settlements Limited

  • Credit Union Services Corporation (Australia) Limited

  • Indue Ltd

One ADI that provides general banking services which does not fall into the other categories.

  • Cairns Penny Savings & Loans Limited

Authorised Non-Operating Holding Companies

  • HBOS Australia Pty Ltd

Reporting Form ARF 394.0

Personal Finance

Instruction Guide

The purpose of this survey is to provide monthly statistics on the provision of finance to individuals for personal (non-business) use. The statistics are used by APRA for regulatory purposes, and may be provided to the Reserve Bank of Australia (RBA) and the Australian Bureau of Statistics (ABS) for policy and statistical purposes.  Published aggregate statistics from this collection are used for research and policy formulation by economists, State and Federal Governments and the housing industry.

A separate form for personal finance in all eight states should be completed.

  • ARF 394.0.1 Personal Finance in NSW;

  • ARF 394.0.2 Personal Finance in VIC;

  • ARF 394.0.3 Personal Finance in QLD;

  • ARF 394.0.4 Personal Finance in SA;

  • ARF 394.0.5 Personal Finance in WA;

  • ARF 394.0.6 Personal Finance in TAS;

  • ARF 394.0.7 Personal Finance in NT; and

  • ARF 394.0.8 Personal Finance in ACT.

General directions and notes

Reporting entity

This form is to be completed by all locally incorporated banks and foreign authorised deposit-taking institutions (ADIs) on a Domestic books basis.

The Domestic books of the locally incorporated banks and foreign ADI relates to the Australian books of the Australian ADI and has the following scope:

  • is an unconsolidated report of the Australian licensed ADI's operations/ transactions that are booked inside Australia;

  • exclude offshore branches of the Australian licensed ADI from this reporting unit;

  • exclude offshore banking units based overseas from this reporting unit;

  • do not consolidate Australian and offshore controlled entities or associated entities that are not ADIs;

  • include Australian based offshore banking units of the licensed ADI; and

  • include transactions with non-residents recorded on Australian books.

This form should be completed by all Credit Unions, Cairns Penny Savings & Loans Limited, Building Societies and Specialist Credit Card Institutions (SCCIs) on a licensed ADI basis.  SCCIs that operate as branches in Australia are required to complete this form for the Australian branch only.

Note: SCCIs that engage only in credit card acquiring activities are not required to complete this form.

Licensed ADI

This refers to the operations of the reporting ADI on a stand-alone basis.

Securitisation deconsolidation principle

Except where stated otherwise on this form, reporting entities must treat any securitisation program vehicles (SPVs) in which the ADI (or a member of its consolidated group) participates in accordance with APRA’s clean sale and separation requirements as non-consolidated independent third parties. As a result, for reporting purposes all assets, liabilities, revenues and expenses of these SPVs must be excluded from the ADI’s reported amounts. Where relevant, report on this form any exposure to or other transaction between the ADI and any such SPV as if such transaction was conducted with an independent third party, regardless of whether the SPV or its assets is consolidated for accounting purposes.

APRA's clean sale and separation requirements are set out in APS 120 Funds Management and Securitisation and related Guidance Notes AGN 120.3 Purchase and Supply of Assets (including Securities Issued by SPVs) and AGN 120.1 Disclosure and Separation. Whenever the clean sale and separation requirements are not met, all the assets, liabilities, revenues and expenses of the SPV are to be consolidated with the ADI’s reported amounts.

Reporting period

The information provided in this form should be for the calendar month up to and including the last day of the reporting month. Locally incorporated banks, Foreign ADIs, Credit Unions, Cairns Penny Savings & Loans Limited, Building Societies and SCCIs should submit the completed form to APRA within 10 business days after the end of the relevant reporting month.

measurementUnit of

Amounts denominated in foreign currency are to be converted to AUD in accordance with AASB 121 The Effects of Changes in Foreign Exchange Rates (AASB 121).

The general requirements of AASB 121 for translation are:

  1. foreign currency monetary items outstanding at the reporting date must be translated at the spot rate at the reporting date;[1]

    [1]Monetary items are defined to mean units of currency held and assets and liabilities to be received or paid in a fixed or determinable number of units of currency. Spot rate means the exchange rate for immediate delivery.

  1. foreign currency non-monetary items that are measured at historical cost in a foreign currency must be translated using the exchange rate at the date of the transaction;[2]

    [2]Examples of non-monetary items include amounts prepaid for goods and services (e.g. prepaid rent); goodwill; intangible assets; physical assets; and provisions that are to be settled by the delivery of a non-monetary asset.

  1. foreign currency non-monetary items that are measured at fair value will be translated at the exchange rate at the date when fair value was determined.

Transactions arising under foreign currency derivative contracts at the reporting date must be prepared in accordance with AASB 139 Financial Instruments: Recognition and Measurement (AASB 139).  However, those foreign currency derivatives that are not within the scope of AASB 139 (eg some foreign currency derivatives that are embedded in other contracts) remain within the scope of AASB 121.

For APRA purposes equity items must be translated using the foreign currency exchange rate at the date of investment or acquisition. Post acquisition changes in equity are required to be translated on the date of the movement.

As foreign currency derivatives are measured at fair value, the currency derivative contracts are translated at the spot rate at the reporting date.

Exchange differences should be recognised in profit and loss in the period which they arise. For foreign currency derivatives, the exchange differences would be recognised immediately in profit and loss if the hedging instrument is a fair value hedge. For derivatives used in a cash flow hedge, the exchange differences should be recognised directly in equity.

The ineffective portion of the exchange differences in all hedges would be recognised in profit and loss; and

  1. translation of financial reports of foreign operations.

A foreign operation is defined in AASB 121 as meaning an entity that is a subsidiary, associate, joint venture or branch of a reporting entity, the activities of which are based or conducted in a country or currency other than those of the reporting entity.

Exchange differences relating to foreign currency monetary items that form part of the net investment of an entity in a foreign operation, must be recognised as a separate component of equity.

Translation of financial reports should otherwise follow the requirements in AASB 121.

Basis of preparation

Unless otherwise specifically stated, information reported on this form should comply with Australian accounting standards.

Definitions

A separate form for personal finance in all eight states should be completed. Where the entity has no activity in any state, check the “nil form” box. The form requests details of new commitments to provide personal finance to individuals for personal (non-business) use. Only the Australian activities of the business should be included on the form. If exact figures are not available please provide careful estimates. Please note that the items listed under ‘Including’ and ‘Excluding’ are examples and should not be taken as a complete list of items to be included or excluded.

What is a “commitment”?

A commitment is a firm offer to provide finance which has been accepted by the client. A commitment generally exists once a loan application has been approved, and a loan contract or letter of offer has been issued to the borrower.

With the exception of unsecured loans for alterations and additions (Question 6) and unsecured loans for owner-occupied housing (Question 7), commitments are to be reported regardless of whether they are secured or unsecured and, if secured, regardless of the type of security.

Include:

  • new lending commitments which have also been cancelled during the month;

  • commitments to provide finance to your employees; and

  • commitments for revolving credit loans secured by mortgage (mortgage backed overdrafts) on residential properties where the stated purpose at application is as a personal line of credit (see III. Home Equity Loans - Guidelines).

Exclude:

  • commitments to non-residents;

  • commitments to secured loans for the construction or purchase of dwellings intended for owner occupation or for alterations and additions to owner-occupied dwellings, which should be reported on ARF 392.0 Housing Finance;

  • commitments to individuals for use in connection with a business carried on by them, which should be reported on ARF 391.0 Commercial Finance; and

  • commitments for revolving credit loans secured by mortgage where the primary purpose at application is for the purchase of owner-occupied residential property (see III. Home Equity Loans).

What is a ‘dwelling’?

A dwelling is a place of residence which is:

  • contained in a building which is an immobile structure;

  • private (i.e. not generally accessible to the public); and

  • self contained (i.e. includes bathing and cooking facilities).

Specific instructions

Part A: Commitments for fixed loans - by purpose

The purpose of the loan is that specified by the borrower. Multi-purpose loans should be split and each component reported in the appropriate purpose classification. Where this is not possible, the whole loan should be classified to the major purpose.

Fixed loans generally involve:

  • a commitment for a fixed period for a specific purpose; and

  • repayments over that fixed period which reduce the loan, but do not make further finance available.

  1. Purchase of motor cars

Include:

  • cars, station wagons, 4WD and forward control passenger vehicles/vans.

Exclude:

  • trucks, buses, special vehicles, utilities, panel vans (include in Question 3); and

  • motor cycles/scooters (include in Question 2).

  1. Purchase of other motor vehicles

Include:

  • trucks, buses, special vehicles, utilities and panel vans.

Exclude:

  • motor cycles/scooters (include in Question 2).

  1. Unsecured loans for alterations and/or additions to dwellings

Include:

  • all structural and non-structural changes to dwellings (e.g. garages, carports, pergolas, re-roofing, re-cladding etc.).

Exclude:

  • repairs and maintenance, swimming pools, and other home improvements that do not involve building work (include in Question 13).

  1. Debt consolidation

Include:

  • commitments where the principal purpose is to consolidate and pay out amounts owing by borrowers to third parties.

Exclude:

  • commitments for the principal purpose of refinancing existing personal loans (include in Question 11).

  1. Refinancing

Include:

  • commitments for the principal purpose of refinancing existing personal loans.

Exclude:

  • commitments where the principal purpose is to consolidate and pay out amounts owing by borrowers to third parties (include in Question 9); and

  • refinancing of personal investment loans (include in Question 12).

  1. Loans for personal investment purposes

a) Dwellings for rent/sale

Include:

  • only commitments for dwellings to be occupied by persons other than the owner.

b) Other personal investments

Include:

  • commitments for the purchase of shares and other investment assets.

c) Refinancing

Include:

  • refinancing of loans for personal investments, e.g. purchase of shares and other investment assets, purchase of dwellings for rent/resale.

Exclude:

  • refinancing of personal loans for the purposes listed in Question 1-10 and Question 13, these should be reported in Question 11.

  1. Other

Include:

  • commitments for swimming pools and home improvements (other than alterations and additions), motor accessories and any other purpose not covered above.

Part B: New commitments for revolving credit loans

Revolving credit facilities involve a commitment for a credit or borrowing limit and where the extent of the borrowings used at any one time may be for any amount up to the authorised limit. Repayments (other than of charges and/or interest) reduce the borrowings thereby increasing the amount of unused credit available e.g. overdraft limits, secured revolving credit facilities (mortgage backed overdrafts), credit card facilities and other personal lines of credit.

  1. New credit limits and increases to existing credit limits approved during the month

a) Secured

Include:

  • mortgage backed overdrafts where the primary purpose of the commitment at application is NOT owner-occupied residential property. (Refer III. Home Equity Loans – Guidelines).

Exclude:

  • mortgage backed overdrafts where the primary purpose of the commitment at application is owner-occupied residential property. (Report on ARF 392.0). (Refer III. Home Equity Loans – Guidelines).

  1. Cancellations of and reductions in previously approved credit limits

Include:

  • the actual value of credit limits cancelled and the value by which existing credit limits were reduced during the month.

Exclude:

  • amounts used as balancing or adjustment items (such as adjustments between states). These should be reported in Question 19; and

  • repayments which reduce the used portion of the credit facility, but not the total credit available. These should be excluded from the form altogether.

  1. Balancing item (+/-)

If the previous month’s ‘total credit limits available’ (Q16 last month) plus (+) ‘total new limits approved’ (Q15c) minus (-) ‘cancellations’ (Q18) does not equal the current month’s ‘total credit limits available’ (Q16), please provide the amount and reason for this discrepancy.

Part C: Comments

  1. Please provide comments

  • on any of the information you have supplied on this form;

  • on any questions which caused problems; and

  • if you would like to suggest improvements to this form.

Home equity loans - guidelines

Introduction

The increasing use of home equity loan products by individual (household sector) borrowers as a source of funding has necessitated some additional clarity in how these products should be treated in reporting to ARF 392.0 and ARF 394.0 Personal Finance (ARF 394.0).  Please contact APRA for further advice on these guidelines.

Home equity loans

A home equity loan is a secured revolving credit facility which is secured by the borrower's equity in the home.  In effect, the assets of the borrower (in equity in the home) are freed up so as other activities may be funded.

A home equity loan may be taken to fund a range of activities, including the purchase of a property (for owner occupation), the refinancing of the borrower's existing home (as for all home loan refinancing, this would only be reported if the refinancing involved changing the lender), or any other activity - investment purchases (shares or property), household consumption spending (cars, boats, holidays) or working capital for a small business.  A feature of home equity loans which causes reporting difficulties for lenders is that often the borrower intends to use the home equity loan for a combination of the purposes mentioned.

Reporting of home equity loans on ARF 392.0 and ARF 394.0

  • Attach one of two major (or primary) purposes to each home equity loan commitment- either "Housing" (for Owner Occupation) or "Other" (than housing for owner occupation).

  • Primary purpose "Housing" commitments to be reported under Question 10 (Part C) - Secured Revolving Home Loans - on ARF 392.0.

  • Primary purpose "Other" commitments to be reported as secured personal revolving credit (Question 15) on ARF 394.0, with all drawdowns, re-payments and re-borrowing of principal in subsequent months to be reflected in the value of Credit Used (Question 17).

  • Where it is not possible to isolate the Credit Used (Question 17) for ARF 394.0 on a sub-group of all home equity loan commitments, then some manipulation must be undertaken to ensure the reported value of Credit Used is conceptually consistent with the total value of Used and Unused Credit (Question 16), and previously reported values of new revolving credit commitments on ARF 394.0.

The intention of the table which forms Question 1a-1e on ARF 392.0 is to monitor the total "stock" of all commitments not advanced.  New commitments to lend are added to the stock while advances of commitments and cancellations are removed from the stock.  With a fixed term amortising loan, the commitment is either advanced when the finance is settled, or the commitment lapses and is cancelled.  Where only part of the initial commitment is advanced, then it may be necessary to report a value advanced and a value cancelled, so that the (previously reported) commitment is wholly removed from the stock of all commitments not advanced.  Some lenders may not cancel lapsed commitments until many months after the commitment is made.  We prefer that lapsed commitments are reported as cancellations as regularly as possible.  Once a commitment is cancelled or advanced, it plays no further role in the table in Questions 1a-1e of ARF 392.0.

The treatment of home equity loan commitments in Questions 1a-1e is problematic.  Given that a home equity loan commitment will be reported for ARF 392.0 only if its primary purpose is the purchase of owner-occupied housing, it is reasonable to assume that the majority of the commitment will be advanced in a comparable timeframe as for a regular standard variable loan commitment.  As for all new commitments, the new home equity loan commitment should be added to the stock of undrawn commitments (Question 1b).  Any amount advanced (for the purchase of owner-occupied housing) in the same or subsequent months should be reported as an Advance (Question 1c); at the same time the balance of the commitment (if any) reported as a Cancellation (Question 1d).  The home equity loan commitment (like all housing finance commitments) will take no further part in reporting to ARF 392.0.

Where it is impossible to identify the timing of the drawdown of a home equity loan for the purchase of owner-occupied housing, it is acceptable to assume that the entire value of the commitment is drawn down in the month of the commitment, so that the internal consistency of the Question 1 is preserved.


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