Financial Sector Legislation Amendment (Review of Prudential Decisions) Act 2008 (25 of 2008)

Schedule 2   Direction powers

Banking Act 1959

1   Subsection 11CA(1)

Repeal the subsection, substitute:

(1) APRA may give a body corporate that is an ADI or an authorised NOHC a direction of a kind specified in subsection (2) if APRA has reason to believe that:

(a) the body corporate has contravened a provision of this Act or the Financial Sector (Collection of Data) Act 2001; or

(b) the body corporate has contravened a prudential requirement regulation or a prudential standard; or

(c) the body corporate is likely to contravene this Act, a prudential requirement regulation, a prudential standard or the Financial Sector (Collection of Data) Act 2001, and such a contravention is likely to give rise to a prudential risk; or

(d) the body corporate has contravened a condition or direction under this Act or the Financial Sector (Collection of Data) Act 2001; or

(e) the direction is necessary in the interests of:

(i) if the body corporate is an ADI - depositors of the ADI; or

(ii) if the body corporate is an authorised NOHC - depositors of any ADI that is a subsidiary of the NOHC; or

(f) the body corporate is, or is about to become, unable to meet its liabilities; or

(g) there is, or there might be, a material risk to the security of the body corporate's assets; or

(h) there has been, or there might be, a sudden material deterioration in the body corporate's financial condition; or

(i) the body corporate is conducting its affairs in an improper or financially unsound way; or

(j) the failure to issue a direction would materially prejudice the interests of:

(i) if the body corporate is an ADI - depositors of the ADI; or

(ii) if the body corporate is an authorised NOHC - depositors of any ADI that is a subsidiary of the NOHC; or

(k) the body corporate is conducting its affairs in a way that may cause or promote instability in the Australian financial system.

(1A) The direction must:

(a) be given by notice in writing to the body corporate; and

(b) specify the ground referred to in subsection (1) as a result of which the direction is given.