Consent to sale or disposal of business of an authorised deposit-taking institution - My Credit Union Limited

Overview

The Banking Act 1959 was enacted to regulate and control authorised deposit-taking institutions (ADIs) in Australia, aiming to maintain the stability and integrity of the financial system. The Act provides for the regulation and supervision of ADIs by the Australian Prudential Regulation Authority (APRA), ensuring compliance with prudential standards and protecting depositors' interests. This legislation was introduced to address the need for a comprehensive regulatory framework governing the operations of ADIs, including their mergers, acquisitions, and other business restructuring activities, to safeguard the financial system and public confidence in the banking sector. The enactment of this Act by the Parliament of Australia reflects a policy objective of fostering a stable and secure financial environment conducive to economic growth and stability. This particular instrument, C2017G01233, issued under the Banking Act 1959, grants consent for the sale or disposal of the business of an authorised deposit-taking institution, My Credit Union Limited, to Community CPS Australia Limited. This consent, issued by Stephen Glenfield, a delegate of the Treasurer, ensures the sale or disposal complies with the national interest, and highlights the importance of the Treasurer's oversight in such transactions. The authorisation is intended to maintain the stability and integrity of the financial system by ensuring that significant changes in the structure of ADIs are carried out in a manner that does not jeopardise the interests of depositors or the broader economy.

Scope and Application

The Banking Act 1959 applies to authorised deposit-taking institutions (ADI) within Australia, including their sale or disposal of business, which necessitates prior written consent from the Treasurer. This legislation pertains to the body corporate, My Credit Union Limited, which is an ADI under the Act and has proposed to sell or dispose of its business to Community CPS Australia Limited. The consent granted by the delegate of the Treasurer, Stephen Glenfield, is in accordance with the national interest and ensures the arrangement does not proceed without the necessary authorisation. The Act's jurisdictional reach is national, and the consent extends to the arrangement described in the attached Schedule, which involves a voluntary full transfer of business under the Financial Sector (Business Transfer and Group Restructure) Act 1999. The Act also stipulates that any sale or disposal of business without the Treasurer's consent is void, and non-compliance may result in an offence with a maximum penalty of 200 penalty units. Additionally, the Treasurer has the authority to delegate their powers under the Act to the Australian Prudential Regulation Authority or its members and staff.

Key Provisions

The primary operative section of the Gazetted Notice is section 63 of the Banking Act 1959, which outlines the necessity for an authorised deposit-taking institution (ADI) to obtain prior written consent from the Treasurer before engaging in certain business arrangements. Section 63(1) stipulates that an ADI cannot enter into an agreement for the sale or disposal of its business, carry on business in partnership with another ADI, or effect a reconstruction of the ADI without this consent. Section 63(1AA) mandates that the Treasurer must publish notice of this consent in the Gazette as soon as practicable. This consent is crucial as any arrangement, agreement, or reconstruction entered into without such consent is void and of no effect as per section 63(2). The Treasurer is prohibited from unreasonably withholding consent, as stipulated in section 63(3). Under this legislation, the body corporate, being an ADI, must adhere to the provisions set out in the Banking Act 1959. Specifically, My Credit Union Limited ACN 087 650 584 is obligated to seek and obtain the Treasurer’s written consent before proceeding with the proposed sale or disposal of its business to Community CPS Australia Limited ACN 087 651 143. This requirement is in place to ensure that any significant changes to the business structure of an ADI are reviewed and approved to protect the interests of depositors and the stability of the financial system. The body corporate must ensure that all steps are taken to comply with the notice and the provisions of the Act, including any conditions that may be attached to the consent. The Banking Act 1959 imposes strict penalties for non-compliance with its provisions. Section 63(1) stipulates that an ADI, excluding a foreign ADI, commits an offence if it enters into an agreement or arrangement for the sale or disposal of its business or for carrying on business in partnership with another ADI, or effects a reconstruction of the ADI, without the required prior consent. The maximum penalty for this offence is 200 penalty units, as specified in section 63(1). Furthermore, an offence against subsection 63(1) is an indictable offence, meaning it can be prosecuted in a higher court, as stated in section 63(1A). The Treasurer also has the authority to delegate their powers under section 63 to the Australian Prudential Regulation Authority (APRA), an APRA member, or an APRA staff member, as outlined in section 63(5)(a).