Structured Finance Support (Coronavirus Economic Response Package) (Delegation) Direction 2020

Structured Finance Support (Coronavirus Economic Response Package) (Delegation) Direction 2020

made under subsection 18(4) of the

Structured Finance Support (Coronavirus Economic Response Package) Act 2020

Compilation No. 1

Compilation date:   9 May 2020

Includes amendments up to: F2020N00058

About this compilation

This compilation

This is a compilation of the Structured Finance Support (Coronavirus Economic Response Package) (Delegation) Direction 2020 that shows the text of the law as amended and in force on 9 May 2020 (the compilation date).

The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law.

Uncommenced amendments

The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on the Legislation Register (www.legislation.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the series page on the Legislation Register for the compiled law.

Application, saving and transitional provisions for provisions and amendments

If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.

Modifications

If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the series page on the Legislation Register for the compiled law.

Self‑repealing provisions

If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.

Contents

Part 1—Preliminary

1 Name

3 Authority

4 Definitions

5 What this instrument does

Part 2—Directions

6 Investment strategies and policies

7 Investment decision‑making criteria

8 Investment risk and return

Endnotes

Endnote 1—About the endnotes

Endnote 2—Abbreviation key

Endnote 3—Legislation history

Endnote 4—Amendment history

Part 1—Preliminary

1  Name

  This instrument is the Structured Finance Support (Coronavirus Economic Response Package) (Delegation) Direction 2020.

3  Authority

  This instrument is made under subsection 18(4) of the Structured Finance Support (Coronavirus Economic Response Package) Act 2020.

4  Definitions

  In this instrument:

Act means the Structured Finance Support (Coronavirus Economic Response Package) Act 2020.

ADI means an authorised deposit‑taking institution within the meaning of the Banking Act 1959.

debtor has the meaning given by subsection 204(1) of the National Credit Code.

non‑ADI lender has the same meaning as in the Banking Act 1959.

smaller lender means:

 (a) an ADI that:

 (i) is not able to access a term funding facility provided by the Reserve Bank of Australia using as collateral self‑securitised assets that are acceptable to the Bank; and

 (ii) is not a subsidiary of another ADI where the other ADI is able to access such a term funding facility using as collateral such self‑securitised assets; or

 (b) a non‑ADI lender; or

 (c) a corporation that would be a non‑ADI lender if it were not excluded from being a registrable corporation (within the meaning of the Financial Sector (Collection of Data) Act 2001) by one or more of the following provisions of that Act:

 (i) paragraph 7(2)(i);

 (ii) paragraph 7(2)(ia);

 (iii) paragraph 7(2)(j).

subsidiary has the same meaning as in the Corporations Act 2001.

5  What this instrument does

  Part 2 of this instrument sets out, for the purposes of subsection 18(4) of the Act, directions to delegates under subsection 18(1) of the Act about the exercise of the Minister’s powers under section 12 of the Act.

Part 2—Directions

6  Investment strategies and policies

  In making investments, a delegate must prioritise the following:

 (a) investments that provide support to smaller lenders that have lost access to reasonably priced funding due to the economic effects of the Coronavirus known as COVID‑19;

 (b) investments that maintain and encourage investment by the private sector in the securitisation market for smaller lenders;

 (c) investments that are likely to promote competition in the securitisation market for smaller lenders;

 (d) investments that are structured so as:

 (i) not to restrict renegotiation by smaller lenders and debtors of arrangements for making payments under contracts for credit; and

 (ii) to allow smaller lenders to provide forbearance to debtors in respect of payments under contracts for credit;

 (e) investments that do not adversely affect the capacity of smaller lenders to provide credit.

7  Investment decision‑making criteria

  In making an investment, a delegate must consider the following:

 (a) whether making the investment will be consistent with the strategies and policies set out in section 6;

 (b) the potential of the investment to affect other participants or prospective participants in the securitisation market for smaller lenders, having regard to the strategies and policies set out in section 6;

 (c) if the investment would be made at a rate of return that is less than the market rate—whether the investment is reasonably required, having regard to:

 (i) the strategies and policies set out in section 6; and

 (ii) the other decision‑making criteria in this section;

 (d) whether making the investment will be appropriate, having regard to the matters relating to risk and return set out in section 8;

 (e) whether making the investment will be consistent with the Act (including the objects of the Act).

8  Investment risk and return

  In making investments, a delegate must:

 (a) ensure that the investments of the Fund have an acceptable level of risk, including risk to the Commonwealth balance sheet (noting that credit losses may be higher in the short to medium term due to the economic effects of the Coronavirus known as COVID‑19); and

 (b) aim to achieve over the medium to long term a positive net financial return.

Endnotes

Endnote 1—About the endnotes

The endnotes provide information about this compilation and the compiled law.

The following endnotes are included in every compilation:

Endnote 1—About the endnotes

Endnote 2—Abbreviation key

Endnote 3—Legislation history

Endnote 4—Amendment history

Abbreviation key—Endnote 2

The abbreviation key sets out abbreviations that may be used in the endnotes.

Legislation history and amendment history—Endnotes 3 and 4

Amending laws are annotated in the legislation history and amendment history.

The legislation history in endnote 3 provides information about each law that has amended (or will amend) the compiled law. The information includes commencement details for amending laws and details of any application, saving or transitional provisions that are not included in this compilation.

The amendment history in endnote 4 provides information about amendments at the provision (generally section or equivalent) level. It also includes information about any provision of the compiled law that has been repealed in accordance with a provision of the law.

Misdescribed amendments

A misdescribed amendment is an amendment that does not accurately describe the amendment to be made. If, despite the misdescription, the amendment can be given effect as intended, the amendment is incorporated into the compiled law and the abbreviation “(md)” added to the details of the amendment included in the amendment history.

If a misdescribed amendment cannot be given effect as intended, the abbreviation “(md not incorp)” is added to the details of the amendment included in the amendment history.

Endnote 2—Abbreviation key

Endnote 3—Legislation history

Endnote 4—Amendment history