Banking exemption No. 4 of 2014
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. 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. 4 of 2014 (2015 Exemption) is a new determination and will come into force on 1 January 2015.
- 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 2014 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. This exemption was revoked and a new exemption, Banking Exemption No. 3 of 2014 (2014 Exemption), was remade on 13 October 2014 to add an extra entity to the list of entities exempted under subsection 11(1). The 2014 Exemption will expire on 31 December 2014.
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 Act. The 2015 Exemption is intended to allow Religious Charitable Development Funds to operate under the same conditions as those currently attaching to the 2014 Exemption. APRA is currently reviewing the operation and conditions of the exemption and expects to make a decision on the future operation of the exemption by 31 December 2015.
2. Purpose and operation of the instrument
The purpose of the 2015 Exemption is to continue to exempt those Funds, as applicable, listed in the 2014 Exemption from the prohibitions in section 7 and 8 of the Banking Act for a further period of 12 months.
3. Consultation
APRA has advised Religious Charitable Development Funds that they will continue to be exempt from the prohibitions in section 7 and 8 of the Banking Act until 31 December 2015.
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. 4 of 2014
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.