The Australian Prudential Regulation Authority (APRA)
has today released revised proposals on changes to the exemption
order under the Banking Act 1959 (Cth) for religious
charitable development funds (RCDFs). These are a response to
submissions to APRA's April 2013 discussion paper on this issue
which we reported on in our e-alert of
2 May 2013 APRA moves to tighten prudential oversight over
financiers and religious and charitable funds
APRA remains of the view that unauthorised entities should not
be able to offer deposit products or products with features and
characteristics that are clearly associated with product offerings
of Authorised Deposit-taking Institutions. However, APRA is now
proposing an extension of the exemption order for RCDFs currently
exempted, but subject to additional conditions including:
any product offered to a retail investor will have to have a
minimum term or notice period of 31 days; and
the use of terms 'deposit' and 'at-call' will
not be allowed in relation to retail products or in marketing to
These conditions are consistent with those that APRA has
recently proposed for Registered Financial Corporations and
consistent with the global principle governing the boundaries
between prudentially regulated institutions and shadow banking.
APRA will continue to allow RCDFs to use BPAY to transact
between affiliates of the RCDF and to offer BPAY to wholesale
Charitable organisations who raise investment funds currently
also have exemptions from the licensing, fundraising, debentures
and managed investment provisions of the Corporations Act
2001 (Cth) under ASIC Regulatory Guide 87 (RG 87) if they
comply with the conditions to the exemptions. ASIC recently
consulted on this regulation with proposals to either:
remove existing exemptions available to charities that raise
investment funds under RG 87, or
retain existing exemptions on the basis that they are only
available to organisations that satisfy both existing and new
conditions to the exemptions.
Examples of new conditions proposed include that charities must
hold 75% of their assets in assets that directly relate to their
charitable purpose; and where the fund is offered to retail
have an Australian financial services licence, and
meet minimum capital and liquidity requirements.
Submissions for the ASIC consultation paper closed in July 2013
and ASIC are yet to release a response.
The deadline for submissions to APRA on these revised proposals
is 4 October 2013.
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