Banking exemption No. 2 of 2015
EXPLANATORY STATEMENT
Prepared by the Australian Prudential Regulation Authority (APRA)
Banking Act 1959, section 11
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.
Banking exemption No. 2 of 2015 (2016 Exemption) is for the purposes of continuing to exempt those funds listed in Banking exemption No. 4 of 2014 (2015 Exemption) from the prohibitions in sections 7 and 8 of the Banking Act for a further period of 12 months.
- 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.
The 2015 Exemption determined that the Religious Charitable Development Funds (RCDFs) listed in Schedule 1 of that determination are exempt from the prohibitions in sections 7 and 8 of the Banking Act from 1 January 2015 until 31 December 2015, provided that the RCDFs comply with the conditions specified in Schedule 2 of that determination.
The 2015 Exemption will expire on 31 December 2015 and APRA grants a further 12 months’ exemption to the RCDFs under the 2016 Exemption.
RCDFs 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 Act. The 2016 Exemption is intended to allow RCDFs to operate under the same conditions as those currently attaching to the 2015 Exemption.
2. Purpose and operation of the instrument
The purpose of the 2016 Exemption is to continue to exempt those Funds, as applicable, listed in the 2015 Exemption from the prohibitions in sections 7 and 8 of the Banking Act for a further period of 12 months.
3. Consultation
APRA has advised the RCDFs that they will continue to be exempt from the prohibitions in sections 7 and 8 of the Banking Act until 31 December 2016.
4. Regulation Impact Statement
The Office of Best Practice Regulation has advised that a Regulation Impact Statement is not required for this legislative instrument.
5. Statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
A Statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 is provided at Attachment A to this Explanatory Statement.
Attachment A
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Banking exemption No. 2 of 2015
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.