Overview

Banking exemption No. 2 of 2011, prepared by the Australian Prudential Regulation Authority (APRA) under subsection 11(4) of the Banking Act 1959, addresses the need to adjust exemptions for certain charitable development funds. This amending instrument revises Banking exemption No. 1 of 2011, which previously revoked multiple exemptions and replaced them with a single exemption applicable to specific charitable funds, provided they met certain conditions. The purpose of this amending instrument is to update the names of three funds listed in the principal instrument and to include an additional fund, The Properties Corporation of the Churches of Christ, which APRA has determined meets the conditions for exemption. APRA consulted with the affected funds and the Office of Best Practice Regulation, which confirmed that no further regulatory analysis was necessary due to the minor nature of these changes.

Scope and Application

Banking exemption No. 2 of 2011 applies to charitable development funds operating in Australia, specifically those listed in Schedule 1 of the principal instrument, and is administered by the Australian Prudential Regulation Authority (APRA) under the Banking Act 1959. This legislation provides exemptions for certain charitable development funds from the requirement to be authorised by APRA as authorised deposit-taking institutions, provided they meet specified conditions outlined in Schedule 2 of the principal instrument. The scope of the Act includes updating the names of existing funds and adding a new fund to the list of those eligible for exemption. The amending instrument, which varies the principal instrument, comes into force on the day it is registered on the Federal Register of Legislative Instruments. APRA consulted with the affected funds and the Office of Best Practice Regulation, which confirmed that no further regulatory impact analysis was required due to the minor nature of the changes. This legislation applies across Australia, aligning with the jurisdictional reach of the Banking Act 1959.

Key Provisions

Banking exemption No. 2 of 2011, as detailed in the explanatory statement, primarily modifies the Banking exemption No. 1 of 2011, which had already streamlined the exemptions for certain charitable development funds operating in Australia. This amending instrument comes into effect on the day it is registered on the Federal Register of Legislative Instruments (FRLI) (subsection 11(4)). It is important to note that under subsection 11(1) of the Banking Act 1959 (the Act), the Australian Prudential Regulation Authority (APRA) is empowered to determine, in writing, that certain provisions of the Act do not apply to a person while the determination is in force (subsection 11(1)(a) to (e)). Furthermore, subsection 11(4) allows APRA to vary or revoke such a determination. The amending instrument specifically addresses the need to update the names of three funds listed in Schedule 1 of the principal instrument. These funds are now known as 'Anglican Funds - South Australia', 'Baptist Financial Services Australia Limited', and 'UCA Funds Management Limited'. Additionally, it includes a new fund, The Properties Corporation of the Churches of Christ, into Schedule 1 of the principal instrument, acknowledging that it meets all conditions set out in Schedule 2 of the principal instrument. The obligations imposed by this amending instrument are primarily on the funds listed in the schedules, requiring them to comply with the conditions specified in Schedule 2 of the principal instrument. This ensures that these funds do not need to be authorised by APRA as authorised deposit-taking institutions under section 9 of the Act, provided they adhere to the stipulated conditions. The amendment also mandates that APRA must consult with the affected funds and the Office of Best Practice Regulation (OBPR), confirming that no further regulatory analysis is required due to the minor and machinery nature of the changes. In terms of consequences, any breach of the conditions set out in Schedule 2 could result in the exemption being revoked, thereby requiring the funds to seek authorisation under section 9 of the Act. The Act does not specify particular offences or penalties for breaches of the exemption conditions in this context, but non-compliance could lead to regulatory scrutiny and potential revocation of the exemption. The specific penalties for breaches of the Banking Act 1959 would apply, which can include substantial fines and, in serious cases, criminal charges.