Conditions on banking authority 2022 – MyLifeMyFinance Limited
Banking Act 1959
To: MyLifeMyFinance Limited ABN 54 087 651 750 (the ADI)
SINCE the ADI holds a section 9 authority to carry on banking business in Australia (the authority) that is subject to conditions, as specified in the schedule (the existing conditions),
I, Clare Gibney, a delegate of APRA, under paragraph 9AA(1)(b) of the Act, VARY the conditions on the authority by replacing the existing conditions with the conditions specified in the schedule (the varied conditions).
This instrument commences on the day it is made. Dated: 25 January 2022
Clare Gibney General Manager Banking Division
Interpretation
In this instrument:
APRA means the Australian Prudential Regulation Authority.
ADI, banking business and section 9 authority have their respective meanings given in subsection 5(1) of the Act.
Notes
APRA is required to publish this instrument in the Gazette.
A decision to impose conditions or additional conditions, or vary the conditions, on a section 9 authority is a decision to which Part VI of the Act applies. You may request APRA reconsider the decision in accordance with subsection 51B(1) of the Act. The request for reconsideration must be made in writing, must state the reasons for the request, and must be given to APRA within 21 days after the day on which you first received notice of this decision, or within such further period as APRA allows. If you are dissatisfied with the outcome of APRA’s reconsideration of the decision, you may, subject to the Administrative Appeals Tribunal Act 1975, apply to the Administrative Appeals Tribunal for review of the reconsidered decision. The address where written notice may be given to APRA is Level 12, 1 Martin Place, Sydney NSW 2000.
Schedule – the existing conditions
- The ADI must consult with APRA prior to commencing any new line of business (on- or off-balance sheet).
2. From 1 February 2022, the Board of the ADI must have at least two independent directors who are not also directors of any other company in the Challenger group.
3. From 1 February 2022, the Board Risk Committee and the Board Audit Committee of the ADI must each have at least one independent director who is not also a director of any other company in the Challenger group.
4. The ADI must maintain a first line credit underwriting function located within the ADI at all times.
5. From 1 November 2021, the ADI must maintain a second line credit risk function located within the ADI at all times.
6. The funds and other assets of the ADI and its subsidiaries must not be used to directly or indirectly fund, or provide security for, the purchase of financial products issued or underwritten by a member of the Challenger group that is not a subsidiary of the ADI except with the written agreement of APRA.
7. The ADI may outsource its treasury management functions to CIP Asset Management (part of Challenger Limited) only to the extent that the functions are already outsourced as at the commencement of this instrument and provided that the value of the total assets of the ADI does not exceed $1 billion.
Interpretation
In this schedule:
Challenger group means Challenger Limited ABN 85 106 842 371 and its subsidiaries (within the meaning of section 50 of the Corporations Act 2001).
total assets means the total assets worked out in accordance with the method for calculating total assets under Reporting Standard ARS 320.0 as in force from time to time and, if Reporting Standard ARS 320.0 is replaced by a different Reporting Standard, that Reporting Standard as in force from time to time.
Schedule – the varied conditions
- The ADI must consult with APRA prior to commencing any new line of business (on- or off-balance sheet).
2. From 1 March 2022, the Board of the ADI must have at least two independent directors who are not also directors of any other company in the Challenger group.
3. From 1 March 2022, the Board Risk Committee and the Board Audit Committee of the ADI must each have at least one independent director who is not also a director of any other company in the Challenger group.
4. The ADI must maintain a first line credit underwriting function located within the ADI at all times.
5. From 1 November 2021, the ADI must maintain a second line credit risk function located within the ADI at all times.
6. The funds and other assets of the ADI and its subsidiaries must not be used to directly or indirectly fund, or provide security for, the purchase of financial products issued or underwritten by a member of the Challenger group that is not a subsidiary of the ADI except with the written agreement of APRA.
7. The ADI may outsource its treasury management functions to CIP Asset Management (part of Challenger Limited) only to the extent that the functions are already outsourced as at the commencement of this instrument and provided that the value of the total assets of the ADI does not exceed $1 billion.
Interpretation
In this schedule:
Challenger group means Challenger Limited ABN 85 106 842 371 and its subsidiaries (within the meaning of section 50 of the Corporations Act 2001).
total assets means the total assets worked out in accordance with the method for calculating total assets under Reporting Standard ARS 320.0 as in force from time to time and, if Reporting Standard ARS 320.0 is replaced by a different Reporting Standard, that Reporting Standard as in force from time to time.
Overview
The Conditions on banking authority 2022 (C2022G00060) is an instrument enacted to vary the conditions on the banking authority of MyLifeMyFinance Limited, an Authorised Deposit-taking Institution (ADI), under the Banking Act 1959. This legislation was introduced to ensure that the ADI adheres to specific conditions that safeguard the integrity and stability of the financial system. Enacted by Clare Gibney, a delegate of the Australian Prudential Regulation Authority (APRA), this instrument replaces the existing conditions with new varied conditions to further regulate the ADI's operations. The primary objective is to maintain the financial health and compliance of the ADI with the regulatory framework established by APRA, ensuring the protection of depositors and the stability of the banking sector. This legislative instrument is effective from the date of its creation, demonstrating the dynamic nature of financial regulation in response to evolving risks and market conditions.
Scope and Application
The Conditions on Banking Authority 2022 applies to MyLifeMyFinance Limited, an authorised deposit-taking institution (ADI) under the Banking Act 1959. The Act imposes conditions on the authority of the ADI to carry on banking business in Australia, which are varied by this instrument. The varied conditions affect the structure and composition of the ADI's Board and its committees, requiring at least two independent directors who are not also directors of any other company in the Challenger group, and at least one independent director in each committee from 1 March 2022. It also mandates the maintenance of specific credit risk functions and restricts the use of the ADI's funds for certain transactions within the Challenger group, subject to APRA's written agreement. Furthermore, the ADI can outsource its treasury management functions to CIP Asset Management only if it meets certain conditions and asset thresholds. This instrument operates under the Commonwealth jurisdiction, extending its application through subordinate instruments as necessary.
Key Provisions
The primary provisions of the Conditions on Banking Authority 2022 – MyLifeMyFinance Limited (Gazette) vary the conditions on the section 9 authority held by MyLifeMyFinance Limited (ADI) under the Banking Act 1959. The ADI is required to consult with the Australian Prudential Regulation Authority (APRA) before starting any new line of business, whether on or off-balance sheet (section 1). The Board of the ADI must have at least two independent directors who are not also directors of any other company in the Challenger group, with this requirement coming into effect from 1 March 2022 (section 2). Both the Board Risk Committee and the Board Audit Committee of the ADI must each have at least one independent director who is not also a director of any other company in the Challenger group, also effective from 1 March 2022 (section 3). The ADI must maintain a first line credit underwriting function within the company at all times (section 4) and a second line credit risk function, effective from 1 November 2021 (section 5). Additionally, the funds and other assets of the ADI and its subsidiaries must not be used to directly or indirectly fund, or provide security for, the purchase of financial products issued or underwritten by a member of the Challenger group that is not a subsidiary of the ADI, except with the written agreement of APRA (section 6). The ADI may outsource its treasury management functions to CIP Asset Management (part of Challenger Limited) only to the extent that the functions are already outsourced as at the commencement of this instrument and provided that the value of the total assets of the ADI does not exceed $1 billion (section 7).
The Banking Act 1959 imposes several obligations and requirements on the ADI. Firstly, the ADI must consult with APRA prior to commencing any new line of business, whether on or off-balance sheet (section 1). The Board of the ADI must ensure that there are at least two independent directors who are not also directors of any other company in the Challenger group, with this requirement coming into effect from 1 March 2022 (section 2). Both the Board Risk Committee and the Board Audit Committee of the ADI must each have at least one independent director who is not also a director of any other company in the Challenger group, also effective from 1 March 2022 (section 3). The ADI must maintain a first line credit underwriting function within the company at all times (section 4) and a second line credit risk function, effective from 1 November 2021 (section 5). The ADI is also required to ensure that its funds and other assets, and those of its subsidiaries, are not used to directly or indirectly fund, or provide security for, the purchase of financial products issued or underwritten by a member of the Challenger group that is not a subsidiary of the ADI, except with the written agreement of APRA (section 6). Furthermore, the ADI may outsource its treasury management functions to CIP Asset Management (part of Challenger Limited) only to the extent that the functions are already outsourced as at the commencement of this instrument and provided that the value of the total assets of the ADI does not exceed $1 billion (section 7).
The Conditions on Banking Authority 2022 – MyLifeMyFinance Limited (Gazette) does not explicitly outline specific offences, penalties, or civil/criminal consequences for breach. However, under the Banking Act 1959, breaches of the conditions imposed on the ADI's section 9 authority may result in various sanctions, including the potential revocation of the authority. The Banking Act 1959 and the Administrative Appeals Tribunal Act 1975 provide mechanisms for reconsideration and review of APRA's decisions, allowing the ADI to seek reconsideration of a decision within 21 days of receiving notice of it or within a further period allowed by APRA (subsection 51B(1) of the Act). If dissatisfied with the outcome of APRA's reconsideration, the ADI may apply to the Administrative Appeals Tribunal for review of the reconsidered decision, subject to the provisions of the Administrative Appeals Tribunal Act 1975. The specific penalties for breaches of the Banking Act 1959 or other related legislation are not outlined in this particular gazette and would need to be referred to in the relevant Acts and their respective regulations.