Changes to the Banking Act 1959 made as part of the Treasury Laws Amendment (Banking Measures No. 1) Act 2018 have now taken effect. Background

Section 66 changes

Authorised deposit-taking institutions (ADIs) will be permitted to use the word ‘bank’ without restriction under the Banking Act. The terms ‘credit union’, ‘credit society’, credit co-operative’ and ‘building society’ will continue to be restricted terms.

ADIs that are credit unions or building societies may continue to use those terms, as well as the restricted words bank, banker and banking, including as part of a corporate or business name.

The changes to the Banking Act also allow APRA to make a determination under section 66AA that an ADI or class of ADIs is not permitted to use the word bank (which would also apply to the words banker and banking). APRA will consider using this power in respect of ADIs that do not have the ordinary characteristics of banks (for example, purchased payment facilities), or otherwise in serious or unusual circumstances that warrant the making of a determination.

Restricted ADI licensing framework
APRA has published an Information Paper setting out a new pathway for financial entities to become registered as an authorised deposit-taking institution (ADI) in Australia.

Under the new framework, eligible entities can seek a Restricted ADI licence, allowing them to conduct a limited range of business activities for two years while they build their capabilities and resources.

The framework establishes the eligibility criteria, minimum initial and ongoing requirements and application of the prudential and reporting standards during the restricted phase of operation. It also acts as a guide to help Restricted ADI applicants during the licensing process.

Regulatory capital

The Financial Services Royal Commission has published APRA’s Background Paper 9: The regulatory capital framework for authorised deposit-taking institutions (ADIs).