Overview

The Banking Act 1959 was enacted to provide for the regulation of banking in Australia, ensuring that entities carrying out banking business are appropriately authorised and supervised. One of the key provisions of the Act is the ability to revoke the authority of an authorised deposit-taking institution (ADI) to carry out banking business, a power exercised by the Australian Prudential Regulation Authority (APRA). The revocation process aims to protect the national interest and the interests of depositors in the event that an ADI is no longer considered fit to operate. In this instance, the Authority of Newcom Colliery Employees Credit Union Ltd was revoked on 6 February 2015, following a written application by the ADI to APRA. The revocation was confirmed by Keith Chapman, a delegate of APRA, on 27 May 2015, following satisfaction that such action was not contrary to the national interest or the interests of the depositors. This revocation ensures compliance with the Act and protects the broader financial system.

Scope and Application

The Banking Act 1959 applies to authorised deposit-taking institutions (ADIs) operating in Australia, which includes banks, credit unions, and building societies, as defined in subsection 5(1) of the Act. The Act regulates entities that carry on banking business in Australia, ensuring they comply with prudential standards and other regulatory requirements. The Act's jurisdiction extends nationally, covering all states and territories within Australia. However, the revocation of an ADI's authority to carry on banking business is specifically governed by subsection 9A(1) of the Act, which allows for the revocation if an ADI applies in writing to the Australian Prudential Regulation Authority (APRA) and APRA is satisfied that such revocation is not contrary to the national interest or the interests of the ADI's depositors. Notably, this revocation does not extend to other provisions of the Act or related laws unless explicitly stated in the notice of revocation. The Act also provides for penalties under subsection 8(1) for any body corporate found to be carrying on banking business without the appropriate authority, with penalties ranging up to 1,000 penalty units for a body corporate under the Crimes Act 1914. The Act mandates that APRA publish a notice of such revocation in the Gazette and may choose additional methods of publication as deemed appropriate.

Key Provisions

The primary operative sections of the Banking Act 1959 that pertain to this legislation include sections 9A(1) and 8(1). Under section 9A(1), an authorised deposit-taking institution (ADI) can apply to the Australian Prudential Regulation Authority (APRA) to revoke its authority to carry on banking business in Australia. The authority granted under this section allows APRA to revoke the ADI's banking licence if certain conditions are met. Section 8(1) outlines the criminal offence for a body corporate carrying on banking business without the appropriate authorisation, with specific penalties associated with such breaches. The Act imposes several obligations on the ADI and APRA. The ADI must apply in writing to APRA to revoke its authority, and APRA must then assess whether the revocation would be contrary to the national interest or the interests of the ADI's depositors. If APRA is satisfied that the revocation does not contravene these interests, it has the authority to revoke the ADI's banking licence. APRA is also required to publish a copy of the revocation notice in the Gazette and may choose to publish it in other appropriate ways to ensure transparency and public awareness of the revocation. Breaching the provisions of the Banking Act 1959 can result in significant consequences. Under section 8(1), a body corporate found to be carrying on banking business without proper authorisation commits an indictable offence, subject to a penalty of up to 200 penalty units or 1,000 penalty units in the case of a body corporate, as stipulated by the Crimes Act 1914. The offence continues on each subsequent day that the unauthorised activity persists, leading to potential cumulative penalties. Additionally, if an ADI commits an offence under section 8(1), the offence is considered continuous from the first day of the unauthorised activity until it ceases or until conviction, whichever is later.