The Treasury Laws Amendment (Financial Sector Regulation) Bill 2018 has been passed by the House of Representatives and is awaiting passage by the Senate.

UPDATE: The Bill was passed by the Senate on 15 November 2018 and received Royal Assent on 29 November 2018.

The Bill amends the Financial Sector (Shareholdings) Act 1998 to support new entrants to the financial services market.

Shareholding restrictions
The 15 percent ownership restriction applying to insurance companies (life insurance and general insurance companies), Authorised Deposit-taking Institutions (ADIs) – broadly banks, credit unions, and building societies, and relevant holding companies under the Financial Sector (Shareholdings) Act 1998 (FSSA) will be increased to 20 percent.

The Bill also introduces a streamlined FSSA approval path for owners of domestically incorporated companies applying to become a new financial sector company (or those proposing to acquire shares in entities licensed by the Australian Prudential Regulation Authority (APRA) for fewer than five years).

If the owners meet a fit and proper test and comply with ongoing conditions then they will be able to exceed the 20 percent shareholding limit.

Restricted banking licences
New entrants will be allowed to operate subject to considerable concessions coupled with a time-limited restriction on the ADI licence.

While concessions to the prudential framework apply, a Restricted ADI will be subject to further restrictions on their ADI licence in order to limit risk to depositors and financial stability.

The Restricted ADI will transition to an ADI licence that is not subject to a time limit or exit the industry before the end of the restricted period.

The existing ADI licence (not limited in duration) remains available to all applicants and is unchanged.