Treasury Laws Amendment (Banking Measures No. 1) Act 2018 (9 of 2018)

Schedule 1   Non-ADI lender rules

Banking Act 1959

2   After Part IIA

Insert:

Part IIB - Provisions relating to the non-ADI lenders

Division 1 - Main concepts

38B Meaning of non-ADI lender and Part IIB provision of finance

(1) A non-ADI lender is a registrable corporation (within the meaning of the Financial Sector (Collection of Data) Act 2001) that is engaged in the Part IIB provision of finance.

(2) Part IIB provision of finance means the provision of finance (within the meaning of the Financial Sector (Collection of Data) Act 2001), other than:

(a) the activities mentioned in paragraphs 32(1)(e), (f), (g) and (h) of that Act; and

(b) the provision of finance (within the meaning of that Act) outside Australia; and

(c) the entry into an arrangement that is a derivative (within the meaning of the Corporations Act 2001).

Division 2 - Non-ADI lender rules

38C APRA may make non-ADI lender rules for non-ADI lenders

(1) Subsection (2) applies if:

(a) APRA considers that the Part IIB provision of finance by one or more non-ADI lenders materially contributes to risks of instability in the Australian financial system; and

(b) APRA considers that it is necessary, in order to address those risks, to make rules under subsection (2).

(2) APRA may, in writing, determine rules for the purpose of addressing those risks, to be complied with by:

(a) all non-ADI lenders; or

(b) a specified class of non-ADI lenders; or

(c) one or more specified non-ADI lenders.

(3) To avoid doubt, a rule cannot require a non-ADI lender to conduct its business and activities in a particular way to the extent that the business and activities are unrelated to the Part IIB provision of finance.

(4) A rule may impose different requirements to be complied with in different situations or in respect of different activities.

(5) Without limiting the matters in relation to which APRA may determine a rule, a rule may require:

(a) each non-ADI lender; or

(b) each non-ADI lender included in a specified class of non-ADI lenders; or

(c) a specified non-ADI lender; or

(d) each of 2 or more specified non-ADI lenders;

to ensure that its subsidiaries (or particular subsidiaries), or it and its subsidiaries (or particular subsidiaries), collectively satisfy particular requirements in relation to the risks mentioned in subsection (1).

(6) A rule may provide for APRA to exercise powers and discretions under the rule, including (but not limited to) discretions to approve, impose, adjust or exclude specific requirements in relation to one or more specified non-ADI lenders.

(7) A rule may provide for a matter by applying, adopting or incorporating, with or without modification, any matter contained in an instrument or other writing as in force or existing from time to time, despite:

(a) section 46AA of the Acts Interpretation Act 1901; and

(b) section 14 of the Legislation Act 2003.

(8) A rule referred to in paragraph (2)(c) has effect:

(a) from the day on which the rule is made; or

(b) if the rule specifies a later day - from that later day.

38D Non-ADI lender rules revoked after 2 years

(1) A non-ADI lender rule is revoked at the end of the period of 2 years beginning on the day the rule is made.

(2) If, at any time during that period, APRA considers that the conditions in subsection 38C(1) still apply in relation to the non-ADI lender rule, APRA may, by written instrument, extend (or further extend) the period for a period of 2 years beginning on the day the instrument is made.

Note: An extension under this subsection does not affect the operation of Part 4 of Chapter 3 (sunsetting) of the Legislation Act 2003.

38E Variation and revocation of non-ADI lender rules

(1) APRA may, in writing, vary or revoke a non-ADI lender rule.

(2) An instrument varying or revoking a non-ADI lender rule referred to in paragraph 38C(2)(c) has effect:

(a) from the day on which the instrument is made; or

(b) if the instrument specifies a later day - from that later day.

38F Notification and consultation regarding non-ADI lender rules

Notification

(1) If APRA makes or varies a non-ADI lender rule referred to in paragraph 38C(2)(c) it must, as soon as practicable, give a copy of the rule, or of the variation, to the non-ADI lender, or to each non-ADI lender, to which the rule applies.

(2) If APRA revokes a non-ADI lender rule referred to in paragraph 38C(2)(c) it must, as soon as practicable, give notice of the revocation to the non-ADI lender, or to each non-ADI lender, to which the rule applied.

(3) If APRA extends the period mentioned in subsection 38D(1) in relation to a non-ADI lender rule referred to in paragraph 38C(2)(c) it must, as soon as practicable, give notice of the extension to the non-ADI lender, or to each non-ADI lender, to which the rule applies.

Consultation

(4) Before making a non-ADI lender rule, or varying or revoking a non-ADI lender rule, APRA must consult with ASIC.

(5) A failure to comply with subsection (4) does not affect the validity of the action concerned.

38G Which non-ADI lender rules, etc., are legislative instruments

(1) The following instruments are not legislative instruments:

(a) a non-ADI lender rule referred to in paragraph 38C(2)(c);

(b) an instrument under section 38E varying or revoking a non-ADI lender rule referred to in paragraph 38C(2)(c);

(c) an instrument under subsection 38D(2) extending the period mentioned in subsection 38D(1) in relation to a non-ADI lender rule referred to in paragraph 38C(2)(c).

(2) Otherwise, an instrument made under section 38C, 38D or 38E is a legislative instrument.

38H Review of decisions relating to non-ADI lender rules

Part VI applies to the following decisions:

(a) a decision to make a non-ADI lender rule referred to in paragraph 38C(2)(c);

(b) a decision to vary such a rule;

(c) a decision to make an instrument under subsection 38D(2) in relation to such a rule.

38J Division not to limit operation of other provisions

Nothing in this Division is intended to limit the operation of any other provision of this Act or of the Reserve Bank Act 1959.

Division 3 - APRA's power to issue directions

38K APRA may give directions in certain circumstances

(1) APRA may give a body corporate that is a non-ADI lender a direction to take specified action to comply with the whole or a part of a non-ADI lender rule if APRA has reason to believe that:

(a) the body corporate has contravened the non-ADI lender rule; or

(b) the body corporate is likely to contravene the non-ADI lender rule.

(2) 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.

(3) In deciding whether to give a direction under subsection (1), APRA must consider whether the body corporate has taken reasonable steps in the past to comply with the non-ADI lender rule.

(4) The direction may deal with the time by which, or period during which, it is to be complied with.

(5) The body corporate has power to comply with the direction despite anything in its constitution or any contract or arrangement to which it is a party.

(6) APRA may, by notice in writing to the body corporate, vary the direction if, at the time of the variation, it considers that the variation is necessary and appropriate.

(7) The direction has effect until APRA revokes it by notice in writing to the body corporate. APRA may revoke the direction if, at the time of revocation, it considers that the direction is no longer necessary or appropriate.

(8) Part VI applies to a decision to give a direction under subsection (1).

38L Non-compliance with a direction under section 38K

(1) A non-ADI lender commits an offence if:

(a) it does, or fails to do, an act; and

(b) doing, or failing to do, the act results in a contravention of a direction given to it under section 38K.

Penalty: 50 penalty units.

Note: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

(2) If a non-ADI lender does or fails to do an act in circumstances that give rise to the non-ADI lender committing an offence against subsection (1), the non-ADI lender commits an offence against that subsection in respect of:

(a) the first day on which the offence is committed; and

(b) each subsequent day (if any) on which the circumstances that gave rise to the non-ADI lender committing the offence continue (including the day of conviction for any such offence or any later day).

Note: This subsection is not intended to imply that section 4K of the Crimes Act 1914 does not apply to offences against this Act or the regulations.

(3) An officer of a non-ADI lender commits an offence if:

(a) the officer fails to take reasonable steps to ensure that the non-ADI lender complies with a direction given to it under section 38K; and

(b) the officer's duties include ensuring that the non-ADI lender complies with the direction, or with a class of directions that includes the direction.

Penalty: 50 penalty units.

Note: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

(4) If an officer of a non-ADI lender fails to take reasonable steps to ensure that the non-ADI lender complies with a direction given to it under section 38K in circumstances that give rise to the officer committing an offence against subsection (3), the officer commits an offence against that subsection in respect of:

(a) the first day on which the offence is committed; and

(b) each subsequent day (if any) on which the circumstances that gave rise to the officer committing the offence continue (including the day of conviction for any such offence or any later day).

Note: This subsection is not intended to imply that section 4K of the Crimes Act 1914 does not apply to offences against this Act or the regulations.

(5) In this section, officer has the meaning given by section 9 of the Corporations Act 2001.