2019-2020

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

THE SENATE

 

 

 

 

 

 

BANKING AMENDMENT (DEPOSITS) BILL 2020

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

(Circulated by authority of Senator Malcolm Roberts)

BANKING AMENDMENT (DEPOSITS) BILL 2020

 

 

General Outline

 

This bill will avoid doubt as to the meaning and intent of various provisions in the Banking Act 1959 in relation to bail-in.

 

The effect of the Banking Amendment (Deposits) Bill 2020 will be:

 

·            to confirm that the conversion and write-off provisions of the Banking Act 1959 do not apply to deposit accounts as defined in the bill; and

 

·            to confirm that nothing in the Banking Act 1959 or any other Commonwealth legislation extends power to APRA to implement or authorise or direct the implementation of bail-in in respect of deposit accounts as defined in the bill.

 

Background to bill’s provisions

Since the passing of the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 there have been doubts as to the meaning and intent of various provisions in the Act as to the extension by the Act of power to APRA to implement, authorise or direct bail-in to deposit accounts where the instruments relating to the creation of such accounts did not provide for a power of bail-in being the writing off or conversion of deposit accounts.

This bill will remove those doubts by confirming that the conversion and write-off provisions introduced into the Banking Act 1959 by the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 do not apply to deposit accounts.

The bill will further remove doubt by confirming that nothing in the Banking Act 1959 or any other Commonwealth legislation extends power to APRA to implement or authorise or direct the implementation of bail-in in respect of deposit accounts.

Deposit accounts are defined in the bill and include those accounts commonly understood as current or cheque accounts conducted by customers with Australia’s banks.

 

Summary of Key Provisions of the Bill

 

1.         The bill inserts into the Banking Act 1959 definitions of “bail-in” and “deposit account”.

 

2.         The bill provides that the provisions of the Banking Act 1959 relating to bail-in (the conversion and write-off provisions of the Banking Act 1959 ) do not extend to the bail-in of a deposit account.

 

3.         The bill inserts a clause into the Banking Act 1959 which confirms that nothing in the Banking Act 1959 or any other Commonwealth legislation gives APRA power to implement, authorise or direct the implementation of bail-in of a deposit account.

 

Explanation of Provisions of the Bill

 

4.         Section 1 of the bill inserts into the Banking Act 1959 a definition of “bail-in”.

 

5.         Section 2 of the bill provides that the reference in the Banking Act 1959 to the conversion and write-off provisions of the Banking Act applying to “any other instrument”, shall not include a deposit account.

 

6.         Section 3 of the bill inserts a definition of a “deposit account”.

 

7.         Section 4 of the bill provides that the reference to an instrument in the Banking Act 1959 for the purpose of the conversion and write-off provisions of the Act does not include a deposit account.

 

8.         Section 5 of the bill inserts a clause into the Banking Act 1959 which confirms that nothing in the Banking Act 1959 or any other Commonwealth legislation gives APRA power to implement, authorise or direct the implementation of bail-in of a deposit account.

 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

 

 

Banking Amendment (Deposits) Bill 2020

 

 

This bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

 

 

Overview of the bill

 

The bill will:

 

·            Remove doubts as to the meaning and intent of various provisions in the Banking Act 1959 as to APRA’s power to implement, authorise or direct bail-in to deposit accounts where the instruments relating to the creation of such accounts did not provide for a power of bail-in being the writing off or conversion of deposit accounts, by confirming that the conversion and write-off provisions introduced into the Banking Act 1959 by the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other measures) Act 2018 do not apply to deposit accounts.

 

·            Further remove doubt by confirming that nothing in the Banking Act 1959 or any other Commonwealth legislation extends power to APRA to implement or authorise or direct the implementation of bail-in in respect of deposit accounts.

 

 

Human rights implications

 

 

This bill does not engage any of the applicable rights or freedoms.

 

 

 

Conclusion

 

 

This bill is compatible with human rights as it does not raise any human rights issues.

 

 

 

Senator Malcolm Roberts