The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have agreed on an interim policy for the treatment of mutual organisations under the Corporations Law and the Banking Act.
Changes in responsibilities for supervision of some mutuals came about with the 1 July 1999 implementation of the Financial Sector Reform (Amendments and Transitional Provisions) Act (No.1) 1999.
ASIC now has responsibility for the supervision of any demutualisation of a building society, credit union or friendly society under the Corporations Law. APRA consent is necessary for the use of certain restricted words such as credit union and building society under the Banking Act. To use the name "credit union", the applying company must have a mutual structure.
The Interim Mutuality Policy agreed to by ASIC and APRA will be used as the basis of decisions made by both organisations until further consultations are made with interested parties and a permanent policy can be set in place next year.
Ian Johnston, ASIC Regional Commissioner, said, "The policy will give guidance to the industry and help companies understand the regulators approach to mutuality, principally in determining applications made for exemptions from the new demutualisation regime."
Les Phelps, Executive General Manager of APRA, said, "We are aware that some transferred companies are considering methods of raising new capital and need a clear indication as to the regulators views on how this might impinge on their mutual status. It is important that ASIC and APRA adopt a consistent approach to the concept of mutuality."
The interim policy is based on the previous Australian Financial Institutions Commission (AFIC) Standard on Credit Union Mutuality. It includes key elements of that document, as well as a combination of principles set out in Corporations Law.
Mr Johnston said, "ASIC will be taking a flexible approach to mutuality in dealing with the applications we have received since the 1 July change legislation. Variations may be necessary on a case-by-case basis when looking at the particular structure, circumstances and history of an organisation."
The policy is available on the APRA and ASIC web sites www.apra.gov.au and www.asic.gov.au
For further information:
Gloria Peterson
APRA
02 9210 3385
Irene O'Brien
ASIC
02 9911 2097
