The Australian Prudential Regulation Authority (APRA) has introduced a class exemption order that standardises the conditions under which religious charitable development funds can be exempted from the requirement to be authorised under the Banking Act 1959.
It has been a long-standing practice of APRA to grant exemptions to such funds (also known as "church funds"). These funds are usually established to raise moneys from the public in order to make loans that further the charitable purpose of the fund, an activity that meets the definition of "banking business" under the Banking Act 1959.
Because of their primarily charitable (rather than commercial) purpose, APRA has granted exemptions to these funds, on a case-by-case basis and subject to various conditions.
The new class order will simplify the exemption process and apply a consistent set of exemption conditions to all funds. The conditions preclude funds from offering cheque facilities (except in limited circumstances) or EFTPOS and ATM access; require increased disclosure that funds are not subject to APRA's prudential oversight; and limit advertising to printed material produced under the auspices of the sponsoring religious institution. However, funds are able to continue internet home pages and internet access by investors, subject to the disclosure requirements.
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