Overview

The Banking Act 1959, enacted by the Commonwealth Parliament, governs the banking industry in Australia, establishing a regulatory framework for authorised deposit-taking institutions (ADIs) such as Members Equity Bank Pty Limited. The Act aims to ensure the stability and integrity of the banking sector by providing the Australian Prudential Regulation Authority (APRA) with the authority to impose, vary, or revoke conditions on an ADI's banking business. The revocation of specific conditions on the Authority to carry on banking business, as noted in the gazette, addresses a particular issue concerning the application of Prudential Standard APS 510 in relation to the current chair of the ADI. This revocation is intended to provide flexibility in compliance while ensuring ongoing prudential oversight by APRA.

Scope and Application

The Banking Act 1959 applies to authorised deposit-taking institutions (ADIs), such as Members Equity Bank Pty Limited, which holds an authority to carry out banking business in Australia. The Act is administered by the Australian Prudential Regulation Authority (APRA), which has the power to impose, vary, or revoke conditions on an ADI's authority to conduct banking business, particularly those relating to prudential matters. APRA can revoke the conditions imposed on an ADI's authority, as demonstrated by the revocation of specific conditions on Members Equity Bank's authority detailed in the Gazetted notice. The Act applies nationally across Australia, with APRA having the authority to publish notices of such revocations in the Gazette and other appropriate means. The Act includes provisions for penalties for non-compliance, which can result in significant fines for corporate entities. The scope of the Act can be extended through subordinate instruments such as Prudential Standards, although these are subject to the overarching authority and conditions set out in the principal Act.

Key Provisions

The Banking Act 1959, under section 9, grants an authorised deposit-taking institution (ADI) the authority to carry on banking business in Australia. This authority, however, is subject to conditions that can be imposed, varied, or revoked by the Australian Prudential Regulation Authority (APRA). A recent notice dated 7 August 2013, signed by Stephen Edward Glenfield, a delegate of APRA, revokes certain conditions on the Authority held by Members Equity Bank Pty Limited. These conditions were specified in a Schedule attached to the notice. The revoked conditions pertain specifically to the compliance with Prudential Standard APS 510, which the ADI must adhere to. However, the notice allows the ADI to disregard paragraph 17 of APS 510 concerning the current chair of the ADI, provided the chair remains the same as at the time the notice comes into effect. This exemption from paragraph 17 of APS 510 will cease immediately upon any change in the chair of the ADI. The obligations imposed by this Act on ADIs such as Members Equity Bank include strict adherence to the Prudential Standards set by APRA. The ADI is required to ensure its operations comply with all relevant standards unless explicitly exempted by a notice from APRA. This includes the requirement to immediately cease any exemptions upon a change in the chair of the institution. Breach of the conditions imposed on the ADI's Authority constitutes an offence under subsection 9(6) of the Act. If the ADI does or fails to do an act resulting in a contravention of the Authority's conditions, it is guilty of an offence. The penalty for such an offence is significant, with a maximum of 200 penalty units for individuals or 1,000 penalty units for a body corporate, as stipulated in the Crimes Act 1914. Furthermore, any offence against subsection 9(6) is classified as an indictable offence, with the ADI being liable for the offence from the first day of the contravention until the circumstances that led to the breach are resolved, including the day of conviction or any subsequent days.