Revocation of Authority to carry on banking business
Banking Act 1959
SINCE
- on 24 March 2016 Quay Credit Union Ltd ACN 087 649 723 (the ADI) applied in writing to APRA under subsection 9A(1) of the Banking Act 1959 (the Act), to revoke its authority to carry on banking business in Australia (the Authority); and
B. I am satisfied that revocation of the Authority:
(i) would not be contrary to the national interest; and
(ii) would not be contrary to the interests of the depositors of the ADI,
I, Keith Chapman, a delegate of APRA, under subsection 9A(1) of the Act, REVOKE the Authority.
Dated: 12 September 2016
[Signed]
Keith Chapman
Executive General Manager Specialised Institutions Division
Interpretation Document ID: 224345
In this Notice
APRA means the Australian Prudential Regulation Authority.
ADI is short for authorised deposit-taking institution and has the meaning given in subsection 5(1) of the Act.
banking business has the meaning given in subsection 5(1) of the Act.
Note 1
Under subsection 9A(5A) of the Act, the notice of revocation of the authority may state that the
authority continues in effect in relation to a specified matter or specified period, as though the revocation had not happened, for the purposes of a specified provision of the Act or the regulations, or a specified provision of another law of the Commonwealth that is administered by APRA, or a specified provision of the prudential standards, and the statement has effect accordingly.
Note 2
Under subsection 9A(6) of the Act, APRA must publish a copy of this Notice in the Gazette and
may cause notice of the revocation to be published in any other way it considers appropriate.
Note 3
Under subsection 8(1) of the Act, a body corporate is guilty of an offence if the body corporate
carries on banking business in Australia and the body corporate is not the Reserve Bank and the body corporate is not an ADI and there is no order in force under section 11 of the Act determining that subsection 8
(1) does not apply to the body corporate. A penalty of 200 penalty units applies or by virtue of subsection 4B
(3) of the Crimes Act 1914 in the case of a body corporate, a penalty not exceeding 1,000 penalty units. By virtue of subsection 8(2) of the Act, an offence against subsection 8(1) is an indictable offence. Under subsection 8(3) of the Act, if a body corporate commits an offence against subsection 8(1), the body corporate is guilty of an offence against that subsection in respect of the first day on which the offence is committed and each subsequent day (if any) on which the circumstances that gave rise to the body corporate committing the offence continue (including the day of conviction for any such offence or any later day).
Overview
The Banking Act 1959 was enacted to establish and regulate the prudential framework for the banking industry in Australia. The Act was introduced to address the need for a comprehensive regulatory structure that ensures the stability and integrity of the banking system, thereby protecting depositors and maintaining public confidence in the financial system. The Banking Act 1959 grants the Australian Prudential Regulation Authority (APRA) the power to regulate authorised deposit-taking institutions (ADIs) and to revoke their authority to carry on banking business if deemed necessary. The revocation of an ADI's authority is intended to be carried out in a manner that does not jeopardise the national interest or the interests of depositors. The revocation process, as demonstrated by the case of Quay Credit Union Ltd, is executed by APRA upon application by the ADI and is subject to certain conditions, including the requirement that revocation would not be contrary to the national interest or the interests of depositors. The policy objective of the Act is to safeguard the financial system by ensuring that only institutions meeting the required standards are permitted to operate as banks in Australia.
Scope and Application
The Banking Act 1959 applies to authorised deposit-taking institutions (ADIs) that carry on banking business in Australia. This includes financial institutions that have been granted a banking licence by the Australian Prudential Regulation Authority (APRA). The Act regulates the conduct of these institutions to ensure the stability and integrity of the financial system. The revocation of an ADI's authority to carry on banking business in Australia is governed by subsection 9A(1) of the Act, which allows APRA to revoke an institution's authority if it is satisfied that such action is not contrary to the national interest or the interests of depositors. The revocation is subject to the conditions outlined in subsection 9A(5A) and must be published in the Gazette and any other manner deemed appropriate by APRA under subsection 9A(6). The Act also imposes penalties for unauthorised banking activities under subsection 8(1), with penalties up to 1,000 penalty units for body corporates. The scope of the Act is national, applying across all states and territories within Australia, and it extends to any provision of other relevant laws and regulations administered by APRA or specified in prudential standards.
Key Provisions
The main operative sections of the legislation are subsection 9A(1) of the Banking Act 1959, which provides the authority for the revocation of an authorised deposit-taking institution's (ADI) banking business in Australia, and subsection 9A(5A) which allows for the continuation of certain aspects of the authority despite the revocation. The document specifies that Quay Credit Union Ltd ACN 087 649 723 has applied to the Australian Prudential Regulation Authority (APRA) to revoke its authority, and Keith Chapman, a delegate of APRA, has satisfied himself that such revocation is not contrary to the national interest or the interests of the ADI's depositors.
The obligations imposed by the Act on the parties it governs include the requirement for APRA to publish a notice of revocation in the Gazette and any other appropriate manner under subsection 9A(6) of the Act. Additionally, any ADI must ensure they are properly authorised to carry on banking business in Australia, and if not, they risk contravening subsection 8(1) of the Act. This subsection imposes a significant obligation on ADIs to maintain their authorisation and comply with the Act to avoid legal repercussions.
The Act outlines specific offences and penalties for breaches of its provisions. For instance, under subsection 8(1) of the Act, any body corporate found to be carrying on banking business in Australia without the requisite authorisation is guilty of an indictable offence. The penalty for such an offence is up to 200 penalty units, and under subsection 4B(3) of the Crimes Act 1914, the penalty may extend to a maximum of 1,000 penalty units in the case of a body corporate. This dual penalty structure ensures that any unauthorised banking activities are met with significant legal consequences. Furthermore, subsection 8(3) of the Act stipulates that an offence is ongoing for each day the contravention continues, reinforcing the need for continuous compliance with the Act's requirements.