Consent to sale or disposal of business of an ADI 2024 – Illawarra Credit Union Limited

Overview

The Consent to sale or disposal of business of an ADI 2024 – Illawarra Credit Union Limited, issued on 11 October 2024, is an instrument under subsection 63(1) of the Banking Act 1959. This Act was introduced to regulate the banking industry in Australia and ensure the stability and integrity of the financial system. The legislation empowers the Treasurer or their delegate to consent to arrangements or agreements for the sale or disposal of an authorised deposit-taking institution's (ADI) business, provided the national interest is taken into account. This specific consent pertains to Illawarra Credit Union Limited, an ADI not classified as a foreign ADI, which proposes to transfer its business to another ADI, Community First Credit Union Limited. The arrangement is detailed in the schedule as a voluntary total transfer of business under the Financial Sector (Transfer and Restructure) Act 1999. The enactment of this instrument by Stephanie Hewitt, a delegate of the Treasurer and General Manager of the General Insurance and Banking Division at APRA, reflects the policy objective of maintaining the stability of the banking sector while facilitating necessary restructuring within the industry. By consenting to this arrangement, the Australian government acknowledges the importance of the national interest in the financial sector's evolution and aims to ensure that the transfer of business is conducted in a manner that upholds public confidence and safeguards the financial system.

Scope and Application

The Consent to sale or disposal of business of an ADI 2024 – Illawarra Credit Union Limited, issued under the Banking Act 1959, applies specifically to the Illawarra Credit Union Limited, an authorised deposit-taking institution (ADI) that is not a foreign ADI, as defined in the Act. This legislative instrument grants approval for the proposed sale or disposal of the Illawarra Credit Union Limited's business to another ADI, the Community First Credit Union Limited, through a total business transfer arrangement as outlined in the schedule and under the Financial Sector (Transfer and Restructure) Act 1999. The consent is contingent on the Treasurer, or their delegate, considering the national interest. The jurisdictional reach of this Act extends to Commonwealth legislation, impacting the specified financial institutions within Australia. This consent does not create any exclusions, exemptions, or thresholds beyond those already stipulated in the Banking Act 1959 and related subordinate legislation.

Key Provisions

Section 63(1) of the Banking Act 1959 (the Act) requires the Treasurer, or their delegate, to consent to the sale or disposal of the business of an authorised deposit-taking institution (ADI) that is not a foreign ADI, if the Treasurer considers it to be in the national interest. This consent is provided in the form of a Gazette notice (C2024G00613), issued by Stephanie Hewitt, a delegate of the Treasurer. This notice consents to the proposed sale or disposal of the business of Illawarra Credit Union Limited (the ADI) to Community First Credit Union Limited, as outlined in the attached schedule. The schedule describes a voluntary total transfer of business under the Financial Sector (Transfer and Restructure) Act 1999. The Act imposes certain obligations and requirements on the ADI and the acquiring institution in the context of the sale or disposal of the ADI’s business. Firstly, the ADI must ensure that the sale or disposal is conducted in a manner that maintains the stability and integrity of the financial system. This includes complying with any conditions imposed by the Treasurer or their delegate as part of the consent process. The acquiring institution, Community First Credit Union Limited, must also adhere to these conditions and ensure that the acquisition does not compromise the financial system's stability. The Act provides for potential offences, penalties, and civil or criminal consequences for breaches of its provisions. While the specific penalties are not detailed in the Gazette notice, breaches of the Act can generally lead to significant civil penalties, including fines. In more severe cases, criminal penalties may apply, including imprisonment. The exact penalties depend on the nature and severity of the breach, as well as any relevant provisions in other legislation, such as the Financial Sector (Transfer and Restructure) Act 1999. Both the ADI and the acquiring institution must therefore ensure strict compliance with all relevant legislative requirements to avoid any adverse legal consequences.