Financial Sector Reform (Consequential Amendments) Act 1998

Overview

The Financial Sector Reform (Consequential Amendments) Act 1998 was enacted by the Parliament of Australia to address the need for comprehensive amendments across various legislative acts following the introduction of the Financial Sector Reform (Amendments and Transitional Provisions) Act 1998. This Act ensures consistency and alignment within the legislative framework by updating references and definitions in numerous statutes to reflect changes in the financial sector, particularly concerning authorised deposit-taking institutions (ADIs). The primary objective is to replace references to "banks" with "ADIs" where appropriate and to adjust related definitions and provisions to accommodate the new terminology. By doing so, the Act aims to maintain the integrity and clarity of the legal provisions affected by the financial sector reforms, ensuring that the updated legislative language aligns with the current regulatory landscape. This Act operates in conjunction with other legislative measures to streamline and modernise the financial regulatory environment in Australia.

Scope and Application

The Financial Sector Reform (Consequential Amendments) Act 1998 applies to various Commonwealth Acts, amending them to reflect changes introduced by the Financial Sector Reform (Amendments and Transitional Provisions) Act 1998. The primary focus of this Act is to update the definitions and references to "authorised deposit-taking institutions" (ADIs) and to replace references to "approved banks" with ADIs in numerous legislative instruments. These amendments encompass a broad range of Acts, including the Advisory Council for Inter-government Relations Act 1976, the Banking Act 1959, the Cheques Act 1986, and the Trade Practices Act 1974, among others. The Act extends its application to ensure consistency across these Acts, aligning them with the new financial sector regulatory framework. Additionally, the Act makes specific amendments to the Australian Securities and Investments Commission Act 1989 and the Trade Practices Act 1974 to address unconscionable conduct and consumer protection in relation to the supply of financial services, applying to corporations in trade or commerce, including financial corporations and trading corporations formed within Australia or its territories. The Act also delineates its jurisdictional reach by specifying that certain provisions extend to conduct outside Australia by bodies corporate incorporated or carrying on business within Australia, Australian citizens, and persons ordinarily resident in Australia, contingent on ministerial consent. The Act further ensures that its provisions do not exclude or limit the concurrent operation of state or territory laws, except as expressly provided. Exclusions and specific thresholds are noted within the text, particularly concerning the value of services and the definition of a consumer. The scope of the Act's application is further extended or restricted through subordinate instruments, as indicated in the commencement sections.

Key Provisions

• The Financial Sector Reform (Consequential Amendments) Act 1998 amends various Acts to reflect the changes made by the Financial Sector Reform (Amendments and Transitional Provisions) Act 1998. The primary sections of the Act involve the replacement of the term "bank" with "authorised deposit-taking institution" (ADI) in many of the specified Acts, aligning definitions and references to the new term as set out in the Banking Act 1959. For instance, in the Anglo-Australian Telescope Agreement Act 1970, "approved bank" is replaced with "ADI," and in the Broadcasting Services Act 1992, the definition of "authorised lender" is updated to include "an ADI (authorised deposit-taking institution)." The Act also makes several other amendments to definitions and terms to ensure consistency across the legislative framework, such as changing "bank" to "ADI" or expanding the definition to include "ADI" where appropriate.
• The obligations imposed by the Act on the parties and entities it governs primarily involve the adaptation of existing provisions to accommodate the new term "ADI." This includes ensuring that any references to "bank" are updated to "ADI" and that definitions are consistent with the new terminology. For example, the Bankruptcy Act 1966 now defines "ADI" as a body corporate authorised to take deposits under the Banking Act 1959 or the Reserve Bank of Australia, while removing the previous definition of "approved bank." These amendments necessitate that financial institutions and entities update their records, documentation, and operational procedures to comply with the new definitions and references.
• The Act also establishes several offences and penalties for breaches of its provisions. Under Subdivision G (sections 12GA to 12GO) of the Australian Securities and Investments Commission Act 1989, a person who contravenes certain provisions related to consumer protection and unconscionable conduct is guilty of an offence. For individuals, the penalty is a fine not exceeding 400 penalty units, and for bodies corporate, the fine can be up to 2,000 penalty units. Additionally, the Court has the authority to grant injunctions, make orders for disclosure of information or publication of advertisements, and take other measures to enforce compliance. Civil proceedings for contraventions can be instituted within specified timeframes, and findings in such proceedings can serve as prima facie evidence in subsequent actions. For instance, under section 12GF, a person suffering loss or damage from conduct that contravenes certain provisions can bring an action for recovery of the loss or damage within three years from the date the cause of action accrued.
• In terms of civil and criminal consequences, the Act stipulates that certain orders and undertakings can be enforced, and failure to comply with these can result in additional fines and penalties. For example, under section 12GN, if a Court makes an order prohibiting the payment or transfer of moneys or property, a person contravening or failing to comply with such an order is guilty of an offence and can be fined up to 200 penalty units for individuals and 1,000 penalty units for bodies corporate. These provisions underscore the seriousness with which the Act treats non-compliance and aim to ensure that financial entities adhere to the updated legal standards. The Act further outlines the procedures for the transfer of matters between courts and the conditions under which such transfers can occur, ensuring a coordinated approach to enforcement and compliance.

Legal classification tags

Area of Law

Consumer Law

Commercial Law

Corporate Law & Governance

Instrument

Act

Concepts

Definitions & Interpretation

Repeal & Amendment

Commencement Provisions

Licensing & Registration

Prohibited Conduct

Enforcement Powers

Civil Penalty Provisions