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Australian Regulatory Compliance Review
Australian Technology and IP Business
Credit Union and Mutual Law
National Consumer Credit Reform
Personal Property Securities Australia
Longview Business Insights
Australian Private Health Insurers
Wills, Trusts, Super
Mutuals Resource Centre
Commonwealth legislation
Corporate Governance
Not-for-Profit links
Regulator Links
Our December compliance workshop will cover the following
1. New Account Switching Rules
2. Final draft Mutual Banking Code of Practice
3. Credit Reporting Update
4. AML Update
5. Workplace Law Update: The Fair Work Bill
6. Stamp duty Amendments
7. Deposit Guarantee Scheme
If you're interested in joining our Compliance Group contact Levina Chim phone 02 8234-4777
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The hardship threshold has increased to $325,710. The next change will be on 10 December 2008.
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APRA has issued a circular advising that it"has assessed the terms of the Deed of Guarantee and Scheme Rules of 20 November 2008 under which ADIs may apply for certain liabilities to be guaranteed by the Commonwealth Government. The guarantee meets the criteria for an eligible guarantee under APS 112. Accordingly, ADIs holding debt instruments or deposits issued by another ADI, where the instrument is guaranteed by the Commonwealth of Australia under this program, may apply the risk-weight for claims on the Australian Government to those holdings. As per APS 112, claims on the Australian Government receive a zero risk-weight. This also applies to deposits of up to $1 million guaranteed under the Financial Claims Scheme."
But APRA "expects that any reduction in regulatory capital requirements from the application of lower risk-weights will be reflected in higher capital ratios during the period of the guarantee, rather than any reduction in capital levels."
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From 28 November large deposits (over $1 million) will only be guaranteed if the ADI is approved and pays the fee.
That means lodging your application as soon as possible.
The final form of the Commonwealth’s documents and requirements can be downloaded here.
Today’s Financial Review gives an idea of the behind the scenes activity going on in relation to finalising the deposit guarantee details and the competition issues surrounding deposit rates.
The Commonwealth requires an external legal opinion on the executed counter-indemnity to be lodged with the application. We have a team that has been working on this and the effects of Counter-Indemnity Deed.
For more information, call Shannon Adams ( 08 8213 5534 08 8213 5534 ), David Jacobson ( 07 3878 5098 07 3878 5098 ) or Richard Joice ( 02 9299 7577 02 9299 7577 ).
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Leading up to the corporate reporting and AGM season I spoke to many Chairs and directors about their concerns. Sometimes it was a disclosure issue or a question involving voting or election procedures, but often it involved how to ensure that the board worked together effectively to carry out its responsibilities and manage risks.
With elections over, now is a good time for boards to demonstrate leadership and ensure that their policies are up to date:
I've put together a number of programs specifically for mutuals for delivery in your boardroom or at your strategic planning retreat. Download the information sheet
Ring or email me if you'd like more details.
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The KPMG Annual Financial Institutions Performance Survey is always worth looking at.
There is a separate section on building societies and credit unions .
The key ratios used are in themselves interesting: whilst the number of members is a reported statistic, the report does not create ratios using that information.
Excluding credit unions that have merged, a number of credit unions have actually reported a decrease in the number of members whilst at the same time reporting an increase in assets. This is most likely the result of a dormant accounts program, which allows a credit union to focus on active members by closing inactive accounts.
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Westpac's APS 330 disclosure, whilst likely more complex than that to be disclosed by most credit unions, gives an example of the details required.
APS 330 (pdf) requires locally incorporated Australian -owned ADI's, including credit unions and building societies, to report by 25 November 2008 on their basic capital information (as listed in Tables 16 and 17) for the quarter ending 30 September 2008 and then within 40 business days after the end of each subsequent quarter.
For non-listed ADI's the disclosures required in Table 15 of Attachment B must be published on an annual basis as soon as practicable after the lodgement date for the ADI’s annual financial reports as required under the Corporations Act 2001.
An ADI must publish its Prudential Disclosures on its website, in full in a clearly identifiable location.
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The legislation covering the deposit guarantee is:
The government has also released a copy of the Interim Deed of Guarantee in Respect of Specified Wholesale Borrowing and Deposits of ADIs dated 2 November 2008. It covers wholesale funding by Australian and Foreign ADIs. It also covers deposits with Foreign ADIs. It will expire at midnight on 27 November 2008, when it is intended that it will be replaced with a separate facility.
There has been speculation that further legislation will be required for the wholesale funds guarantee to carry the government's AAA rating. See The Australian.
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The Australian Prudential Regulation Authority (APRA) has released a consultation package on proposed revisions to its requirements for the external auditor of an authorised deposit-taking institution (ADI).
APRA is proposing to amend Prudential Standard APS310 Audit and Related Arrangements for Prudential Reporting to take account of changes in ADI group structures, developments in audit-related prudential standards applied to other APRA-regulated institutions and, importantly, changes in ADI prudential reporting requirements flowing from the introduction of the Basel II Capital Framework in Australia.
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I'm usually cynical about futurists but found Future Files: A history of the next 50 years by Richard Watson interesting.
Published in 2007 I would have said last year that its section on banking and financial services was obvious. But the section on debt does say this:
Eventually there will be a major global recession..And when it does come, the severity and hardship will be almost unprecedented because of the amount of debt built up by individuals, corporations, an even entire countries. ..Businesses that will do well in such a situation include local lenders and banks with physical branches. Why? Because customers will seek security and familiarity, ideally with a human face attached.
So here are the other 4 trends he suggests will transform financial services:
On regulation he says:
Big banks.. will come under increasing scrutiny about their lending practices, and there will be calls for salary and profit caps…Smaller operators will be deluged by a sea of red tape, regulation, and compliance requirements, and will find it increasingly difficult to operate profitably.
By the way he also predicts the extinction of getting lost, retirement, keys, coins and peace and quiet.
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