The Australian Prudential Regulation Authority has revoked an existing consent for non-regulated financial businesses operating in the short-term money market to describe themselves as ‘merchant banks’.

In its review of the guidelines for approval to use the term ‘bank’ under Section 66 of the Banking Act 1959, APRA found that the term ‘merchant bank’ had been overtaken in common language by the term ‘investment bank’, a term that APRA does not allow unauthorised financial businesses to use. Therefore, APRA believes the use of the term ‘merchant bank’ could cause confusion in the minds of the public when used by entities that are not authorised to carry on banking business in Australia.