Revocation of Authority to carry on banking business
Banking Act 1959
SINCE
- on 28 October 2014 Service One Mutual Limited, formerly Service One Credit Union Limited ABN 42 095 848 598 (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 David Chapman, a delegate of APRA, under subsection 9A(1) of the Act, REVOKE the Authority.
Dated: 24 April 2015
[Signed]
Keith David Chapman Executive General Manager Specialised Institutions Division
Interpretation Document ID: 215218
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 regulate and provide a framework for the banking industry in Australia, ensuring that institutions providing banking services adhere to certain standards and operate within the law. The Act aims to protect the interests of depositors and maintain the stability of the financial system. The revocation of an authorised deposit-taking institution's authority to carry on banking business under this Act is a mechanism to address situations where an institution may no longer meet the necessary regulatory standards or poses a risk to financial stability. The Australian Prudential Regulation Authority (APRA) is the body responsible for overseeing the revocation process, ensuring that it is conducted in a manner that does not compromise the interests of depositors or the national interest. The policy objective behind this legislative action is to safeguard the integrity and reliability of the banking sector in Australia.
Scope and Application
The Banking Act 1959 governs the authorisation and regulation of authorised deposit-taking institutions (ADIs) in Australia, including the revocation of their authority to carry on banking business. This legislative instrument applies specifically to entities that have been granted a banking licence by the Australian Prudential Regulation Authority (APRA). In this case, the revocation of the Authority applies to Service One Mutual Limited, formerly Service One Credit Union Limited, which has requested to cease its banking operations. The Act allows for the revocation of a banking licence if it is in the national interest and does not negatively impact the depositors of the ADI. The revocation of the Authority is subject to jurisdictional constraints, as it pertains to banking activities conducted within Australia. The Act may also extend its application through subordinate instruments, allowing for further detailed regulation and enforcement mechanisms. Additionally, the Act stipulates penalties for any body corporate that carries on banking business without the appropriate authorisation, thereby maintaining the integrity and stability of the financial sector.
Key Provisions
The Banking Act 1959, particularly in relation to the revocation of authority for an authorised deposit-taking institution (ADI) to carry on banking business, outlines several key provisions. Section 9A(1) provides the framework under which an ADI can apply to the Australian Prudential Regulation Authority (APRA) to revoke its authority. This is precisely what Service One Mutual Limited did, applying to APRA for the revocation of its Authority to carry on banking business in Australia. Once the delegate of APRA is satisfied that such a revocation is not contrary to the national interest or the interests of the ADI's depositors, they can proceed with the revocation under section 9A(1) of the Act.
Under the Act, APRA has certain obligations when it comes to revoking an ADI's authority. Subsection 9A(5A) allows for the revocation notice to specify that the authority remains in effect for certain matters, periods, or provisions. This ensures that the revocation can be tailored to specific needs, such as allowing the ADI to wind up its affairs in an orderly manner. Furthermore, under subsection 9A(6), APRA is required to publish the revocation notice in the Gazette and may choose to publish it in other ways deemed appropriate. This transparency ensures that the public is informed about significant changes in the banking sector.
The Banking Act 1959 also stipulates penalties and consequences for breaches related to banking business. Under section 8(1), any body corporate carrying on banking business in Australia without the necessary authority is guilty of an offence. The penalty for such an offence can be up to 200 penalty units, with additional provisions under the Crimes Act 1914 potentially increasing the penalty to a maximum of 1,000 penalty units. This offence is classified as an indictable offence, meaning it can be tried in a higher court. Additionally, under section 8(3), the offence is ongoing, with the body corporate being liable for each day the unauthorised banking business continues, including the day of conviction. These provisions ensure that unauthorised banking activities are subject to strict regulatory oversight and legal consequences.