Banking (Exemption) Order No. 96

Administered by Department of the Treasury

Legislation au F2008B00061 Not in force Legislative Instrument

Legislation content

Australian Prudential Regulation Authority

 

 

Banking Act 1959

 

BANKING (EXEMPTION) ORDER No 96

 

REGISTERED ENTITIES UNDER THE FINANCIAL SECTOR (COLLECTION OF DATA) ACT 2001

 

 

 

I, Darryl Milburn Roberts, a delegate of APRA, make this order under subsection 11(1) of the Banking Act.

 

 

ORDER

 

1. Section 8 of the Banking Act does not apply to a registered entity if the following conditions are complied with.

   NOTE: Section 8 of the Banking Act prohibits a body corporate from carrying on any banking business in Australia unless it is an authorised deposit-taking institution or meets certain other conditions.  “Banking business” is defined in subsection 5(1) of the Banking Act.

 

 

CONDITIONS

 

Obligation to give a warning where the registered entity offers securities and must make disclosure under Part 6D.2 of the Corporations Act

 

2. Where:

 (a) the registered entity takes money on deposit by offering, and issuing or selling, securities; and

 (b) the offer of the securities needs disclosure to investors under Part 6D.2 of the Corporations Act;

 a prudential supervision warning must be clearly and prominently set out in every disclosure document relating to the securities.

 

Obligation to give a warning where the registered entity issues or sells a financial product and must make disclosure under Part 7.9 of the Corporations Act

 

3. Where:

 (a) the registered entity takes money on deposit by issuing or selling a financial product; and

 (b) the issue or sale of the financial product needs a Product Disclosure Statement to be or to have been given to the investor under Part 7.9 of the Corporations Act;

 a prudential supervision warning must be clearly and prominently set out in the Product Disclosure Statement.

 

Obligation to give a warning in other cases

 

4. Where the registered entity takes money on deposit in circumstances that are not covered by clause 2 or 3, a prudential supervision warning must be given to the investor in the following manner:

(a) if, before the deposit product is issued or sold to the investor, information relating to the deposit product is given to the investor in one or more paper documents (whether or not such information is also given to the investor in another form) – the warning must be clearly and prominently set out in one of those documents;

(b) if, before the deposit product is issued or sold to the investor, information relating to the deposit product is given to the investor in one or more electronic communications (whether or not such information is also given to the investor in another form) – the warning must be clearly and prominently set out in one of those electronic communications;

(c) in any other case – the warning must be clearly and prominently set out in a paper document or electronic communication that is given to the investor before the deposit product is issued or sold to the investor.

 

Exceptions to the obligation to give a warning

 

5. Despite clauses 2 to 4, a prudential supervision warning does not have to be given in any of the following circumstances:

 (a) where the investor is a related body corporate of the registered entity;

 (b) where the investor is a professional investor;

 (c) where the deposit product is provided for use in connection with a business that is not a small business;

 (d) where the deposit product is issued or sold to an investor who already holds a deposit product of the same kind;

 (e) where the deposit product is issued or sold by an exempt public authority;

 (f) where the deposit product is not issued or sold in the course of carrying on a business of issuing or selling deposit products;

 (g) where:

  (i) the registered entity takes money on deposit by offering, and issuing or selling, securities; and

  (ii) the offer of the securities does not need disclosure to investors under Part 6D.2 of the Corporations Act because of the application of subsection 708(11), (12), (13), (14), (15), (16), (17), (18), (19), (20) or (21) of the Corporations Act;

 (h) where:

  (i) the registered entity takes money on deposit by issuing or selling a financial product; and

  (ii) the issue or sale of the financial product does not need a Product Disclosure Statement to be or to have been given to the investor under Part 7.9 of the Corporations Act because of the application of subsection 1012D(2), (3), (5), (6), (7), (8) or (9A) of the Corporations Act;

 (i) if the deposit product is not an option – where no consideration is provided for the issue or sale of the deposit product;

 (j) if the deposit product is an option – where:

  (i) no consideration is provided for the option; and

  (ii) no consideration is provided for the underlying rights or interests on the exercise of the option;

 (k) where the following conditions are satisfied:

  (i) the investor has previously been given a paper document or electronic communication containing a statement that:

  • the registered entity is not authorised under the Banking Act and is not supervised by APRA; and
  • an investment in a particular kind of deposit product, or in all deposit products, issued or sold by the registered entity will not be covered by the depositor protection provisions in section 13A of the Banking Act;

  (ii) the statement was displayed clearly and prominently so as to make it reasonably likely to be read by the investor;

  (iii) since being given the statement the investor has not received any information from the registered entity or a representative of the registered entity suggesting that the warning is no longer operative;

  (iv) the deposit product meets the description of the deposit products that, according to the statement, will not be covered by the depositor protection provisions in section 13A of the Banking Act;

 (l) where APRA tells the registered entity in writing that APRA is satisfied that the protection of investors’ interests does not require a prudential supervision warning to be given:

  (i) to the investor; or

  (ii) to a specified class of investors to which the investor belongs; or

  (iii) in respect of the deposit product; or

  (iv) in respect of a specified class of deposit products to which the deposit product belongs;

 (m) where an application for the deposit product was received by the registered entity before 1 June 2003;

 (n) where the following conditions are satisfied:

  (i) the deposit product is securities;

  (ii) the offer of the securities needs disclosure to investors under Part 6D.2 of the Corporations Act;

  (iii) the securities are issued or sold in response to an application that complies with subsection 723(1) of the Corporations Act;

  (iv) the disclosure document which included or accompanied the application form was dated before 1 June 2003;

  (v) the application was received by the registered entity on or before the expiry date of the disclosure document;

 (o) where the following conditions are satisfied:

  (i) the deposit product is a financial product;

  (ii) the issue or sale of the financial product needs a Product Disclosure Statement to be or to have been given to the investor under Part 7.9 of the Corporations Act;

  (iii) the financial product is issued or sold pursuant to an eligible application;

  (iv) the Product Disclosure Statement which included or accompanied the application form was dated before 1 June 2003;

  (v) the eligible application was received by the registered entity within one year after 1 June 2003.

 

6. The exception in paragraph 5(b), (c), (d) or (k) is taken to apply where the registered entity believes, on reasonable grounds, that the facts and matters mentioned in the paragraph exist.

 

 

APPLICATION

 

7. This order applies to a deposit product that is issued or sold on or after 1 June 2003.

 

 

INTERPRETATION

 

8. In this order:

 application, in relation to a deposit product, means a paper or electronic application to acquire the product.

 APRA means the Australian Prudential Regulation Authority.

 authorised representative has the meaning given in section 761A of the Corporations Act.

 Banking Act means the Banking Act 1959.

 Corporations Act means the Corporations Act 2001.

 debenture has the meaning given in section 9 of the Corporations Act.

 deposit product means:

(a) securities; or

(b) a financial product; or

(c) any other arrangement;

that involves the taking of money on deposit.

 disclosure document has the same meaning as in Part 6D.2 of the Corporations Act.

 eligible application has the meaning given in section 1016A of the Corporations Act.

 exempt public authority has the meaning given in section 9 of the Corporations Act.

 financial product has the meaning given in Division 3 of Part 7.1 of the Corporations Act, but does not include securities.

 given, in paragraphs 4(a), (b) and (c) and subparagraph 5(k)(i), means given or sent in a way that would satisfy the requirements of section 1015C of the Corporations Act if the paper documents or electronic communications mentioned in those paragraphs or that subparagraph were Statements to which that section applies.

 investor means the person to whom the deposit product is issued or sold.

 issue:

 (a) in relation to securities – has the same meaning as in Part 6D.2 of the Corporations Act;

 (b) in relation to any other deposit product – has the same meaning as in Part 7.9 of the Corporations Act.

 offer has the same meaning as in Part 6D.2 of the Corporations Act.

 Product Disclosure Statement has the meaning given in section 761A of the Corporations Act.

 professional investor has the meaning given in section 9 of the Corporations Act.

 prudential supervision warning means a statement that:

  • the registered entity is not authorised under the Banking Act and is not supervised by APRA; and
  • the investment will not be covered by the depositor protection provisions in section 13A of the Banking Act.

 registered entity has the same meaning as in the Financial Sector (Collection of Data) Act 2001.

 representative, in relation to a registered entity, means:

 (a) an authorised representative of the entity; or

 (b) an employee or director of the entity; or

 (c) an employee or director of a related body corporate of the entity; or

 (d) any other person acting on behalf of the entity.

 sale:

 (a) in relation to securities – has the same meaning as in Part 6D.2 of the Corporations Act;

 (b) in relation to any other deposit product – has the same meaning as in Part 7.9 of the Corporations Act.

 securities has the same meaning as in Part 6D.2 of the Corporations Act.

 small business has the meaning given in subsection 761G(12) of the Corporations Act.

 

9. Whether a body corporate is related to another body corporate for the purposes of paragraph 5(a) is to be determined in the same way as under the Corporations Act.

 

10. Whether a body corporate is carrying on a business for the purposes of paragraph 5(f) is to be determined in the same way as under the Corporations Act.

 

11. A deposit product is taken to be of the same kind as another deposit product if:

 (a) both of the deposit products are debentures issued by the same person; or

 (b) both of the deposit products are issued by the same person on the same terms and conditions (other than price); or

 (c) both of the deposit products are a financial product and are taken to be the same kind of financial product under the test in subsection 1012D(10) of the Corporations Act.

 

12. A reference to taking money on deposit does not include a reference to taking money on deposit as part-payment for identified goods or services.

 

13. A reference to an Act or provision of an Act is a reference to that Act or provision as in force from time to time.

 

 

 

 

Dated 22 May 2003

 

 

 

 

Darryl Roberts

General Manager, Enforcement

Overview

The Banking (Exemption) Order No. 96, made in 2003 under subsection 11(1) of the Banking Act 1959 by a delegate of the Australian Prudential Regulation Authority (APRA), seeks to address the gap in regulatory oversight of certain financial activities undertaken by entities not authorised as deposit-taking institutions. This legislative instrument exempts registered entities under the Financial Sector (Collection of Data) Act 2001 from the prohibition on carrying on banking business, subject to specific conditions aimed at protecting investors. The primary policy objective is to ensure that investors are adequately informed about the regulatory status and the protections, or lack thereof, applicable to their investments in non-authorised entities. This is achieved by mandating that these entities provide clear warnings about their non-authorisation and the absence of APRA supervision, alongside the non-coverage of their deposit products under the depositor protection provisions. This legislative measure ensures that investors are not misled regarding the nature and risks of their investments, thereby maintaining market integrity and consumer confidence.

Scope and Application

The Banking (Exemption) Order No 96 applies to registered entities under the Financial Sector (Collection of Data) Act 2001, specifically those entities taking money on deposit and required to make disclosure under the Corporations Act 2001. This legislative instrument operates under the authority of the Australian Prudential Regulation Authority (APRA), a delegate of which makes this order under subsection 11(1) of the Banking Act 1959. The order modifies the application of section 8 of the Banking Act, which prohibits a body corporate from conducting banking business in Australia unless it is an authorised deposit-taking institution or meets specific conditions. The order exempts certain registered entities from the prohibition if they comply with specific conditions, primarily requiring them to issue prudential supervision warnings to investors. These warnings must be prominently displayed in disclosure documents or communications related to the deposit products offered, unless specific exceptions apply. The exceptions include situations where the investor is a related body corporate or a professional investor, or where the deposit product is used for business purposes unrelated to small businesses, among other specified conditions. The order applies to deposit products issued or sold on or after 1 June 2003, providing a clear framework for compliance and ensuring that investors are adequately informed about the nature and risks associated with their investments with non-authorised entities.

Key Provisions

The Banking (Exemption) Order No 96, made under the Banking Act 1959, provides exemptions from Section 8 of the Act for certain registered entities engaging in deposit-taking activities, subject to specific conditions. Section 8 generally prohibits a body corporate from carrying on any banking business in Australia unless it is an authorised deposit-taking institution or meets certain conditions, with "banking business" defined in subsection 5(1). This Order allows registered entities to carry on such business if they comply with particular conditions regarding prudential supervision warnings. Firstly, if a registered entity offers securities that require disclosure under Part 6D.2 of the Corporations Act, a prudential supervision warning must be prominently included in every disclosure document relating to those securities (Clause 2). Secondly, if the entity issues or sells financial products that necessitate a Product Disclosure Statement under Part 7.9 of the Corporations Act, the warning must be included in the Product Disclosure Statement (Clause 3). Thirdly, in all other cases where the entity takes money on deposit, the warning must be given in a clear and prominent manner, either in a paper document, electronic communication, or another document or communication provided to the investor before the deposit product is issued or sold (Clause 4). The obligations imposed by the Order on registered entities include ensuring that the prudential supervision warning is clearly and prominently displayed in all relevant documents and communications under the specified conditions. These obligations extend to various scenarios, such as when securities are offered or financial products are issued, and even in cases where no consideration is provided for the deposit product. Furthermore, registered entities must ensure that the warning is communicated to the investor in a timely and effective manner, adhering to the requirements set forth in the Order. Breach of the conditions outlined in the Order may result in civil or criminal consequences, although specific penalties are not detailed in the Order itself. Typically, breaches of financial services regulations in Australia can attract significant penalties under various Acts, including fines and imprisonment. For instance, under the Corporations Act 2001, individuals and entities can face substantial financial penalties for non-compliance with disclosure and other regulatory requirements. The exact penalties would depend on the nature and severity of the breach, as well as the specific provisions of the applicable legislation.

Legal classification tags

Area of Law
Financial Services Law
Banking Law
Instrument
Order
Concepts
Definitions & Interpretation
Reporting & Disclosure Obligations
Licensing & Registration

Interactions

Authorises

All Versions

Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.