Banking (prudential standard) determination No. 1 of 2007 - Revocation of Attachment B to the Prudential Notes and Prudential Standards issued by AFIC under Part 4 of an AFIC Code

Overview

The Banking (prudential standard) determination No. 13 of 2007 was introduced to address the redundancy of certain transitional prudential standards, specifically Attachment B, which imposed reporting requirements on building societies and credit unions. This determination was enacted under the authority of the Australian Prudential Regulation Authority (APRA) as per subregulation 16(1) of the Financial Sector Reform (Amendments and Transitional Provisions) Regulations 1999. Attachment B, an APRA transitional prudential standard, had been continued in effect for building societies and credit unions that became authorised deposit-taking institutions (ADIs) after 1 July 1999. However, these reporting requirements have now been superseded by those imposed on ADIs under the Financial Sector (Collection of Data) Act 2001. Consequently, the purpose of this determination is to revoke Attachment B, aligning with the policy objective of streamlining and modernising the regulatory framework to ensure it remains effective and relevant.

Scope and Application

Banking (prudential standard) determination No. 13 of 2007, issued by the Australian Prudential Regulation Authority (APRA) under the Financial Sector Reform (Amendments and Transitional Provisions) Regulations 1999, revokes Attachment B, which was an APRA transitional prudential standard imposing specific reporting requirements on building societies and credit unions defined under the Financial Institutions Code of any of the states, the Australian Capital Territory, and the Northern Territory. The instrument applies to those entities that, on 1 July 1999, transitioned to become authorised deposit-taking institutions (ADIs) and for whom Attachment B continued to have effect post this date. The revocation of Attachment B reflects the supersession of its reporting requirements by those stipulated under the Financial Sector (Collection of Data) Act 2001, thereby streamlining and modernising the regulatory framework for these financial institutions without altering their practical reporting obligations. This determination ensures consistency and efficiency in the prudential standards applicable to ADIs while eliminating redundant regulatory measures.

Key Provisions

The main operative sections of the Banking (prudential standard) determination No. 13 of 2007 (the instrument) pertain to the revocation of Attachment B, an APRA transitional prudential standard. As per section 11 of the Financial Sector Reform (Amendments and Transitional Provisions) Regulations 1999, Attachment B, which was an attachment to the Prudential Notes and Prudential Standards issued by the Australian Financial Institutions Commission (AFIC) under Part 4 of an AFIC Code, is specifically identified as an APRA transitional prudential standard. The instrument, through its revocation of Attachment B, aligns with subregulation 16(1) of the Regulations, which empowers the Australian Prudential Regulation Authority (APRA) to revoke such standards. The Act imposes obligations on the entities it governs, namely building societies and credit unions, as defined in section 3 of the Financial Institutions Code of any of the States, the Australian Capital Territory, and the Northern Territory. Attachment B originally imposed reporting requirements on these entities, but these have now been superseded by the reporting requirements imposed on Authorised Deposit-taking Institutions (ADIs) under the Financial Sector (Collection of Data) Act 2001. The revocation of Attachment B signifies that these entities are no longer subject to the specific reporting requirements outlined in that attachment, as they have transitioned into ADIs. Breaching the provisions of this instrument could lead to civil or criminal consequences, although the Act does not specify these explicitly. The repealed Attachment B imposed certain prudential standards, and failure to comply with these standards could have resulted in regulatory actions or penalties under the Banking Act 1959 or other relevant legislation. However, since Attachment B has been revoked and replaced with new reporting requirements, any breaches would now be governed by the Financial Sector (Collection of Data) Act 2001 and the updated prudential standards applicable to ADIs. The maximum penalties for such breaches would depend on the specific provisions of the new regulatory framework and the nature of the breach. The instrument also notes that no consultation was undertaken as the revocation of Attachment B does not alter the practical reporting requirements for building societies and credit unions. This decision is based on the understanding that the new reporting requirements under the Financial Sector (Collection of Data) Act 2001 have rendered the old standards redundant, thereby ensuring a smooth transition without imposing additional burdens on the affected entities.