TMeffect Pty Limited and Australian Prudential Regulation Authority

TMeffect Pty Limited (the applicant) sought consent from the Australian Prudential Regulation Authority (APRA) to change its name to include the word "bank". The applicant, which is not an Authorised Deposit-taking Institution (ADI), intended to operate as a crowd-sourced funding intermediary, a financial business. APRA refused consent, citing its guidelines which generally preclude non-ADIs from using restricted words like "bank" due to the potential for public confusion. The matter came before Deputy President S E Frost of the Administrative Appeals Tribunal.

The primary legal issue before the Tribunal was whether APRA's refusal to grant consent for the applicant to use the word "bank" in its name was justified. This involved determining whether the applicant's proposed use of the word would undermine the objective of protecting the public from confusion, and whether the audience to the applicant's business was likely to mistake the applicant for a bank. The Tribunal was required to consider APRA's decision-making process and the application of its guidelines in this context.

Deputy President Frost found that APRA's guidelines, while intended to ensure consistent decision-making, may have improperly deflected delegates from the proper exercise of their discretionary power. Specifically, the guideline's assertion that the use of restricted words by non-ADIs is "inherently confusing and likely to mislead potential customers" effectively predetermined the question of confusion, rather than leaving it for the delegate to assess on the facts of the particular case. The Tribunal reasoned that the statutory question should be whether the public would be protected if the use of the restricted word were permitted, not whether exceptional circumstances exist to overcome an assumed confusion. The guideline, by pre-empting the finding of confusion, provided an unsafe guide to the proper exercise of discretion.

The Tribunal set aside APRA's decision and substituted its own.