Payment Systems (Regulation) Act 1998 - Exemption Notice for Certain Guaranteed Holders of Stored Value Under Section 25

Overview

The Reserve Bank of Australia Payment Systems (Regulation) Act 1998 was enacted to regulate payment systems in Australia, aiming to ensure their efficiency, safety, and reliability. The Act was introduced to address gaps in the regulation of payment systems, particularly in the context of emerging financial technologies and to provide a comprehensive framework for overseeing payment activities. Under the authority vested in it by the Act, the Reserve Bank of Australia has issued an exemption notice allowing certain corporations to hold stored value in respect of purchased payment facilities, despite not being authorised deposit-taking institutions or having specific authorisation under the Act. The exemption applies to corporations whose payment obligations are guaranteed by authorised deposit-taking institutions or government authorities and who are not subject to certain regulatory determinations. The policy objective of this exemption is to facilitate the operation of payment systems while maintaining necessary safeguards and oversight.

Scope and Application

The Reserve Bank of Australia Payment Systems (Regulation) Act 1998 provides the legal framework for the regulation of payment systems within Australia. Under section 25 of the Act, the Reserve Bank of Australia has the authority to issue exemptions to certain classes of corporations that seek to hold stored value in respect of purchased payment facilities, even if these corporations are not authorised deposit-taking institutions and do not hold the necessary authority under section 23 of the Act. This exemption notice specifically pertains to corporations whose obligations in respect of purchased payment facilities are guaranteed by either an authorised deposit-taking institution or a Commonwealth, State, or local government authority, and who are not providers of purchased payment facilities in relation to which a determination has been made by the Australian Prudential Regulation Authority under regulation 3 of the Banking Regulations 1966. The facilities in question must not fall within the scope of the exemption issued by the Reserve Bank of Australia on 10 March 2004, and must not be subject to a determination by APRA under the same regulation. The geographic and jurisdictional reach of this Act is national, as it is administered by the Reserve Bank of Australia, which has a Commonwealth-wide mandate. The application of the Act extends to any corporation within the defined class and to the facilities specified within the exemption notice, thereby providing a clear and specific scope for the exemption. The Act does not explicitly state any exclusions or thresholds, but it implicitly excludes those corporations and facilities that do not meet the criteria set out in the exemption notice. The application of the Act may also be extended or restricted through subordinate instruments, such as regulations or determinations by the Australian Prudential Regulation Authority.

Key Provisions

The main operative sections of the Exemption Notice for Certain Guaranteed Holders of Stored Value under the Payment Systems (Regulation) Act 1998 (sections (a) and (b)) establish the criteria under which certain corporations can hold stored value in respect of purchased payment facilities, despite not being authorised deposit-taking institutions. Specifically, section (a) requires that the corporations' obligations be guaranteed by an authorised deposit-taking institution or a government authority, and section (b) defines the class of payment facilities that can be held under this exemption. The obligations imposed on the parties governed by this Act include ensuring that the corporations are not providers of purchased payment facilities in relation to which a determination has been made by the Australian Prudential Regulation Authority (APRA) under regulation 3 of the Banking Regulations 1966. Additionally, the facilities must not fall within the scope of another exemption issued by the Reserve Bank of Australia on 10 March 2004, and no determination by APRA must exist under regulation 3 of the Banking Regulations 1966 for those facilities. These conditions aim to maintain the integrity of the payment systems and ensure that the corporations are appropriately backed and regulated. The notice does not explicitly state any offences, penalties, or consequences for breach of its provisions. However, any breach of the conditions outlined in the Act could potentially lead to enforcement actions by regulatory authorities such as APRA or the Reserve Bank of Australia. These actions might include the revocation of the exemption, fines, or other regulatory measures to ensure compliance with the Act’s requirements. The maximum penalties for non-compliance with related regulations would be dictated by the overarching legislation governing financial institutions and payment systems in Australia.