EXPLANATORY STATEMENT
STATUTORY RULES 1986 NO. 303
ISSUED BY THE AUTHORITY OF THE TREASURER
BANKING ACT 1959
BANKING (SAVINGS BANKS) REGULATIONS (AMENDMENT)
Section 71 of the Banking Act 1959 (the Act) empowers the Governor-General to make regulations, not inconsistent with the Act, prescribing all matters which by the Act are required or permitted to be prescribed for carrying out or giving effect to the Act. Section 37 of the Act provides that Regulations made under the Act shall cover, inter alia, the following matter:
• the investment of the funds of savings banks.
The Banks (Savings Banks) Regulations have been designed to regulate the conduct of savings banks including, in particular, the investment of funds, those from whom savings banks may not accept deposits and the ability of customers to draw cheques on savings banks.
Regulation 5(2) of the Banking (Savings Banks) Regulations requires a savings bank to maintain investments of specified kinds (such as loans for housing on the security of land, Commonwealth securities, deposits with banks and the Reserve
Bank) that, together with cash on hand in Australia, are not less than the amount on deposit with the savings bank. Concern has arisen that paragraph 5(2)(f) of the Regulations, which specifies securities issued or guaranteed by an authority constituted by or under an Act or a State Act as one kind of permissible investment, has, against the background of recent financial innovation, become vague and unnecessarily restrictive if given a strict interpretation. Confusion may have led to a number of technical breaches by savings banks of this regulation.
The Treasurer has agreed that the regulations should be amended so as to remove any vagueness from the paragraph. This was achieved by removing the vague word ‘securities’ and replacing it with explicit classes of financial instruments. Paragraph 5(2)(f) now reads:
• bills of exchange (other than cheques) drawn by, promissory notes issued by and debentures, stock and bonds issued or guaranteed by, an authority (not being a prescribed bank) of the Commonwealth or of a State or Territory.
Sub-regulation 5(2A) has been omitted because it was made redundant by the above amendment.
The opportunity has also been taken to amend the Schedule referred to in sub-regulation 5(1). This Schedule lists authorised dealers in the short-term money market with which savings banks are permitted to place funds. Several of these authorised dealers changed their names: ‘Delfin Discount Company Limited’ to ‘Colonial Mutual Discount Company Limited’ effective from 27 August 1984; ‘AUC Discount Limited’ to ‘Holst Discount Limited’ effective from 16 July 1985; ‘AMP Discount Corporation Limited’ to ‘PP Discount Limited’ effective from 30 July 1985; ‘Capel Court Securities Limited’ to ‘GIO Securities Limited’ effective from 9 October 1985; and ‘National Discount Corporation Limited’ to ‘NDC Securities Limited’ effective from 2 December 1985. Due to these changes, purely formal amendments to the Schedule are required. These amendments were expressed to take effect retrospectively. Such a retrospective regulation is permissible according to section 48 of the Acts Interpretation Act because it does not prejudicially affect the rights of any person nor impose any retrospective liability on them.