Cheques and Payment Orders Regulations (Amendment)

Administered by Department of the Treasury

Legislation au F1998B00221 Regulations Not in force Legislative Instrument

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Cheques and Payment Orders Regulations (Amendment) 1998 No. 238

EXPLANATORY STATEMENT

STATUTORY RULES 1998 No. 238

Issued by the authority of the Treasurer

Cheques and Payment Orders Act 1986

Cheques and Payment Orders Regulations (Amendment)

Section 119 of Cheques and Payment Orders Act 1986 (the Principal Act) provides that the GovernorGeneral may make regulations prescribing matters which are required or permitted by the Act to be prescribed.

The purpose of the proposed Cheques and Payment Orders Regulations (Amendment) is to amend the Cheques and Payment Orders Regulations as a consequence of amendments made to the Principal Act by the Cheques and Payment Orders Amendment Act 1998 (the Act) extending the right to issue cheques (currently drawn on banks only) to building societies and credit unions.

The Act received the Royal Assent on 2 July 1998 and was proclaimed to commence on 1 December 1998. The period between Royal Assent and Proclamation allowed building societies and credit unions issuing payment orders (an instrument similar to a cheque) time to change over to issuing cheques before the provisions in the Principal Act relating to payment orders were repealed by the Act consequent upon the extension of cheque issuing rights. The regulations repeal existing regulations and forms which refer to payment orders (regulations 7 and 10).

Financial corporations, which are prescribed for the purposes of the Principal Act, will retain the right to issue agency cheques to their customers. The Act contains a saving provision (section 133) to preserve existing regulations in force before the commencement of the Act under which corporations have been prescribed as "non-bank financial institutions" for the purposes of the Principal Act. By virtue of the Act, financial corporations prescribed for the purposes of the Principal Act will be known as "FCA institutions". The regulations substitute the term "FCA institution" for "non-bank financial institution" where appropriate (regulation 5).

The regulations amend existing regulations and forms relating to the gazettal of notices of "designated places" and the keeping of a register of "notified places" for the purposes of the presentment of cheques and payment orders, by omitting references to payment orders and the term "non-bank financial institutions" and by replacing references to the word "bank" with references to "financial institution" (the new definition in the Act encompassing the extended range of institutions, in addition to banks, on which cheques will be able to be drawn) (regulations 6, 8, 9 and 10).

Details of the regulations are set out in the Attachment.

The regulations commenced on 1 December 1998.

ATTACHMENT

Regulation 1 (Commencement)

Subregulation 1. 1 provides that the regulations commence on 1 December 1998.

Regulation 2

Subregulation 2.1 provides that the regulations amend the Cheques and Payment Orders Regulations.

Regulation 3

Subregulation 3.1 omits existing Regulation 1 (Citation) and substitutes new Regulation 1, which provides that the Regulations are named the Cheques Regulations.

Regulation 4

Subregulation 4.1 omits existing Regulation 2 (Interpretation) and substitutes new Regulation 2, which provides under a new heading Definition, that Act in the Regulations means the Cheques Act 1986.

Regulation 5

Subregulation 5.1 omits from existing Regulation 2A the term "non-bank financial institution" and substitutes the term "FCA institution". The heading to Regulation 2A is impliedly amended to the same effect.

Regulation 6

Regulation 6 replaces the term "bank" in the heading to Regulation 3 with the term "financial institution" by adding a Note to that effect, as the heading is not part of the Regulation.

Regulation 7

Subregulation 7.1 omits existing Regulation 5 as a consequence of the repeal by the Act of Part VIII of the Principal Act relating to payment orders (including subsection 109(1), which is referred to in existing Regulation 5).

Regulation 8

Subregulation 8.1 substitutes the term "financial institution" for the term "bank" in paragraph (1)(a) of existing Regulation 6, which relates to the keeping of a register of notices pertaining to the internal presentment by banks of cheques under section 65A of the Principal Act.

Subregulation 8.2 omits paragraphs (1)(c) and (d) of existing Regulation 6, which relate to the keeping of a register of notices pertaining to the internal presentment by non-bank financial institutions of payment orders under subsection 109A of the Principal Act.

The Notes following Regulation 6 are replaced by a new Note.

Regulation 9

Regulation 9 amends existing Regulation 7 by omitting references the term "non-bank financial institution" and replacing the term "bank" with the term "financial institution".

Regulation 10

Regulation 10 amends Form 1 in the Schedule to Regulation 3 by omitting the term "bank" wherever occurring and substituting the term "financial institution", and also by omitting the words "and Payment Orders".

Regulation 10 omits Form 2 in the Schedule to existing Regulation 5, which is itself omitted by subregulation 7.1 as a consequence of the repeal by the Act of Part VIII of the Principal Act relating to payment orders.

 

Overview

The Cheques and Payment Orders Regulations (Amendment) 1998 No. 238 were introduced to amend the existing regulations as a result of legislative changes made by the Cheques and Payment Orders Amendment Act 1998. The latter Act, enacted by the Parliament of Australia and receiving Royal Assent on 2 July 1998, was proclaimed to commence on 1 December 1998. This interval was intended to allow building societies and credit unions, which were to be granted cheque-issuing rights, to transition to this new capability before the repeal of provisions relating to payment orders in the Cheques and Payment Orders Act 1986. The primary objective of the regulations is to adjust the existing framework to accommodate the expanded scope of financial institutions authorised to issue cheques, thereby ensuring a smooth transition and maintaining regulatory coherence. The regulations involve the repeal of existing regulations and forms that refer to payment orders, as well as the substitution of terms to reflect the new category of "FCA institutions" in place of "non-bank financial institutions".

Scope and Application

The Cheques and Payment Orders Regulations (Amendment) 1998 No. 238 amends the existing regulations under the Cheques and Payment Orders Act 1986, to reflect the legislative changes introduced by the Cheques and Payment Orders Amendment Act 1998. This amendment extends the right to issue cheques to building societies and credit unions, which were previously limited to banks. The regulations commenced on 1 December 1998, providing a transition period for these institutions to adjust to the new requirements. The regulations specifically address the terminology and definitions within the existing framework, replacing references to "non-bank financial institutions" with "FCA institutions" and substituting the term "bank" with "financial institution" to encompass the broader range of institutions now permitted to issue cheques. These changes are reflected in various regulations and forms, including those relating to the presentation of cheques and payment orders, and the keeping of registers for designated and notified places. The amendments ensure that the regulatory framework is consistent with the expanded scope of the legislation, effectively integrating building societies and credit unions into the cheque issuance process.

Key Provisions

The Cheques and Payment Orders Regulations (Amendment) 1998 No. 238, issued under the authority of the Treasurer, are intended to implement changes required by the Cheques and Payment Orders Amendment Act 1998. These regulations amend the existing Cheques and Payment Orders Regulations to reflect the legislative amendments that extend the right to issue cheques to building societies and credit unions, previously restricted to banks (Section 119 of the Cheques and Payment Orders Act 1986). The regulations were designed to ensure a smooth transition for building societies and credit unions, allowing them time to adjust to the new requirements before the repeal of provisions related to payment orders. The regulations impose specific obligations on financial corporations, previously referred to as "non-bank financial institutions," which are now designated as "FCA institutions" under the Act. These institutions must comply with the new terminology and definitions stipulated in the regulations, such as substituting the term "FCA institution" for "non-bank financial institution" where applicable (Regulation 5). Additionally, financial corporations must adapt to the changes in the gazettal of notices and the maintenance of registers for cheque presentment, by updating their records to reflect the new definition of "financial institution" instead of "bank" (Regulations 6, 8, 9, and 10). The regulations also address the transition by repealing existing regulations and forms that pertain to payment orders, which are no longer applicable under the amended Act (Regulations 7 and 10). These changes ensure that the regulatory framework aligns with the legislative intent to streamline financial instruments and enhance the scope of entities authorized to issue cheques. In terms of compliance and enforcement, the regulations are designed to ensure that all financial institutions adhere to the updated requirements for issuing cheques and maintaining related records. Failure to comply with these regulations may result in administrative or legal consequences, though specific penalties are not detailed within the text of the regulations themselves. The regulations came into effect on 1 December 1998, providing a clear timeline for institutions to adjust their practices accordingly.

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Commencement Provisions
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