Banking exemption No. 1 of 2013
EXPLANATORY STATEMENT
Prepared by the Australian Prudential Regulation Authority (APRA)
Banking Act 1959, subsection 11(1)
Under subsection 11(1) of the Banking Act 1959 (Banking Act), APRA may, in writing, determine that any or all of the provisions of the Banking Act referred to in paragraphs 11(1)(a) to (e) do not apply to a person while the determination is in force. Under subsection 11(4) of the Banking Act, APRA may, in writing, vary or revoke a determination made under subsection 11(1).
Banking exemption No. 1 of 2013 (2013 Exemption) is a new determination and will come into force on 27 June 2013.
- Background
Under section 7 of the Banking Act, it is an offence for a person who is not a body corporate to carry on banking business in Australia except where there is a determination in force under section 11 of the Banking Act that section 7 does not apply to the person. Under section 8 of the Banking Act, it is an offence for a body corporate to carry on banking business in Australia if the body corporate is not an authorised deposit-taking institution or the Reserve Bank, except where there is a determination in force under section 11 of the Banking Act that section 8 does not apply to the body corporate.
Banking exemption No. 1 of 2011 (2011 Exemption) determined that the Religious Charitable Development Funds listed in Schedule 1 of that determination are exempt from the prohibitions in section 7 and 8 of the Banking Act, provided that they comply with the conditions specified in Schedule 2 of that determination. The 2011 Exemption will expire on 26 June 2013.
Religious Charitable Development Funds are funds that have been set up to borrow and use money for religious and charitable purposes. While the business of such entities has traditionally fallen within the definition of ‘banking business’ under the Banking Act, such entities have historically been exempt from the need to be authorised under the Banking Act. The 2013 Exemption is intended to allow Religious Charitable Development Funds to operate under the same conditions as those currently attaching to the 2011 Exemption. APRA intends to make a new instrument with modified conditions on expiry of the 2013 Exemption on 30 June 2014.
2. Purpose of making the instrument
The purpose of the 2013 Exemption is to continue to exempt those Funds, as applicable, listed in the 2011 Exemption from the prohibitions in section 7 and 8 of the Banking Act for a further period of one year. The following funds listed in the 2011 Exemption have since ceased to operate, and have been removed from the 2013 Exemption:
- Murray Anglican Development Fund; and
- UCA – Investment Fund (Presbytery of Canberra Region).
The 2013 Exemption has also been changed to reflect that the Anglican Development Fund Diocese of Canberra and Goulburn has changed its name to the Anglican Investment and Development Fund.
3. Consultation
APRA has consulted with the Religious Charitable Development Funds, which have been advised that APRA will seek to continue the exemption from the prohibitions in section 7 and 8 of the Banking Act for a further year, at which time APRA will further consult with the Funds on a number of proposals as to the future operation of the exemption.
4. Regulation Impact Statement
The Office of Best Practice Regulation confirmed that no Regulation Impact Statement is required as the 2013 Exemption represents a continuation of the existing policy position and is therefore machinery-of-government in nature.
5. Statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
A Statement of Compatibility with Human Rights is Appendix A to this Explanatory Statement.
Appendix A
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Banking exemption No. 1 of 2013
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
Under section 7 of the Banking Act 1959 (Banking Act), it is an offence for a person who is not a body corporate to carry on banking business in Australia except where there is a determination in force that section 7 does not apply to the person. Under section 8 of the Banking Act, it is an offence for a body corporate to carry on banking business in Australia if the body corporate is not an authorised deposit-taking institution or the Reserve Bank, except where there is a determination in force that section 8 does not apply to the body corporate.
This Legislative Instrument determines that sections 7 and 8 of the Banking Act do not apply to Religious Charitable Development Funds, subject to conditions relating to the facilities offered in connection with the financial products, and any advertising or marketing in connection with the financial products. Religious Charitable Development Funds are funds formed for religious and charitable purposes and operated on a not-for-profit basis.
Human rights implications
APRA has assessed this Legislative Instrument and is of the view that it does not engage any of the applicable rights or freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. Accordingly, in APRA’s assessment, the instrument is compatible with human rights.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.