The Australian Prudential Regulation Authority (APRA) has introduced a class exemption order that standardises the conditions under which religious charitable development funds can be exempted from the requirement to be authorised under the Banking Act 1959.

It has been a long-standing practice of APRA to grant exemptions to such funds (also known as "church funds"). These funds are usually established to raise moneys from the public in order to make loans that further the charitable purpose of the fund, an activity that meets the definition of "banking business" under the Banking Act 1959.

Because of their primarily charitable (rather than commercial) purpose, APRA has granted exemptions to these funds, on a case-by-case basis and subject to various conditions.

The new class order will simplify the exemption process and apply a consistent set of exemption conditions to all funds. The conditions preclude funds from offering cheque facilities (except in limited circumstances) or EFTPOS and ATM access; require increased disclosure that funds are not subject to APRA's prudential oversight; and limit advertising to printed material produced under the auspices of the sponsoring religious institution. However, funds are able to continue internet home pages and internet access by investors, subject to the disclosure requirements.

APRA Chairman, Dr John Laker, said the class exemption order would more clearly demarcate the activities of religious charitable development funds from authorised deposit-taking institutions (ADIs) offering retail banking services.

"Our consultations with funds about exemptions have resulted in a sensible and workable outcome for both APRA and the funds."

A 12-month transition period is in place to enable affected funds to meet the conditions in an orderly manner.

The class exemption order is located on APRA's website at http://www.apra.gov.au/RFC/Religious-charitable-development-funds.cfm.

The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. APRA is funded largely by the industries that it supervises. It was established on 1 July 1998. APRA currently supervises institutions holding approximately $2.2 trillion in assets for 20 million Australian depositors, policyholders and superannuation fund members.

Media and industry inquiries only:
Stuart Snell, Head of Public Affairs
Australian Prudential Regulation Authority
Telephone: 02 9210 3384
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APRA Contact Centre
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