Cheques and Payment Orders Regulations (Amendment)

Overview

The Cheques and Payment Orders Regulations (Amendment) Statutory Rules 1988 were issued under the authority of the Attorney-General, aiming to amend the existing framework established by the Cheques and Payment Orders Act 1986. The primary purpose of this amendment was to address the specific issue of defining non-bank financial institutions (NBFI) and to facilitate their ability to issue payment orders similar to how banks issue cheques. By amending the definition of 'non-bank financial institution', the regulations allow entities such as Wesfarmers Limited and Elders Rural Finance Limited, which are registered corporations under the Financial Corporations Act 1974, to be prescribed as NBFIs. This amendment was intended to provide these entities with the same rights and protections as banks, while also imposing corresponding obligations to ensure efficient and secure processing of cheques and payment orders. The policy objective behind these amendments was to streamline and modernise the financial transaction processes involving non-bank financial institutions.

Scope and Application

The Cheques and Payment Orders Regulations (Amendment) Statutory Rules 1988, issued under the authority of the Attorney-General, pertain to the Cheques and Payment Orders Act 1986. The regulations specifically address the definition of a ‘non-bank financial institution’ (NBFI) as stipulated in subsection 3(1) of the Act, allowing for the inclusion of certain registered corporations as NBFIs for the purposes of that definition. These regulations respond to applications from Wesfarmers Limited and Elders Rural Finance Limited, both registered corporations under the Financial Corporations Act 1974, to be recognised as NBFIs. The Act facilitates NBFIs to issue payment orders, akin to cheques issued by banks, and governs the use of agency cheques issued by these institutions. Furthermore, it provides NBFIs with certain protections when collecting cheques for customers and mandates them to ensure that cheques presented for collection are promptly processed. The application of these regulations is limited to the entities named, thereby extending the Act's provisions to these specific corporations while maintaining its jurisdictional and geographic scope as originally defined.

Key Provisions

The key operative sections of the Cheques and Payment Orders Regulations (Amendment) involve the prescription of Wesfarmers Limited and Elders Rural Finance Limited as non-bank financial institutions (NBFIs) under the definition provided in subsection 3(1) of the Cheques and Payment Orders Act 1986 (the Act) (s1). This amendment allows these corporations to issue payment orders similar to cheques, facilitating the same services that banks offer to their customers, and to engage in activities such as taking advantage of certain protections when collecting cheques for customers (s100, s101). Furthermore, these entities will be subject to the same obligations to ensure that cheques lodged with them for collection are presented promptly, as imposed by section 97 of the Act. The obligations imposed on Wesfarmers Limited and Elders Rural Finance Limited by this amendment include the ability to issue payment orders, similar to cheques, for their customers, which is regulated under section 101 of the Act. Additionally, these entities must adhere to the regulations concerning the use of agency cheques issued by NBFIs, as stipulated in section 100. They are also required to ensure that any cheques lodged with them for collection are presented promptly, as mandated by section 97. This encompasses taking advantage of certain protections when collecting cheques for customers, aligning with the broader regulatory framework provided by the Act. Failure to comply with the obligations and requirements set forth by the Cheques and Payment Orders Act 1986 and the associated regulations may result in civil or criminal consequences. While the specific penalties are not detailed in the provided text, it is common for breaches of financial regulations to incur fines or other penalties as determined by the relevant authorities. The maximum penalties for such breaches would be dictated by the specific provisions of the Act and any related legislation, which may include significant financial penalties or other enforcement actions. It is essential for Wesfarmers Limited and Elders Rural Finance Limited to adhere to these regulations to avoid any potential legal repercussions.