The Australian Prudential Regulation Authority (APRA) has today released updated guidelines in relation to section 66 of the Banking Act 1959. Section 66 deals with the use of restricted terms in relation to banking services.
Under section 66 and 66A of the Banking Act the use of a number of terms is restricted to those institutions that are authorised by APRA to carry on banking business. These terms include the use of ‘bank’, ‘banker’, ‘banking’, ‘building society’, ‘credit union’, ‘credit society’, ‘authorised deposit-taking institution’ and ‘ADI’.
These terms are restricted for use only by authorised deposit-taking institutions (ADIs) regulated by APRA to ensure potential customers are not misled into believing that non-APRA-regulated institutions have the same level of capital adequacy, depositor-priority and other prudential protections that apply to ADIs.
The updated guidelines provide additional information for institutions not regulated by APRA, including information on activities that are likely to be considered ‘financial’; information that should be included in an application to use restricted terms; and the likely timeframes for APRA to consider an application. The updated guidelines issued today also clarify and confirm APRA’s existing policy and practice which restrict the use of the terms ‘banker’ and ‘banking’ by ADIs that are not banks.
The Guidelines - Implementation of section 66 of the Banking Act 1959, have been updated by APRA following a consultation on draft revised guidelines issued in April 2013.
The guidelines can be found on the APRA website.