Page 966 - Week 04 - Wednesday, 17 June 1992
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The Financial Institutions Code provides character criteria for building societies to reflect their ongoing commitment to provide residential finance. The code also has regard to the evolving role of societies specialising in servicing the changing financial needs of the community. The Financial Institutions Code provides for a prime purpose test where a minimum of 50 per cent of a building society's group assets must be held in the form of residential finance either owner occupied or tenanted.
Credit unions are required by the Financial Institutions Code to maintain 60 per cent of their assets in personal loans to members and no more than 10 per cent of such financial accommodation may be for commercial purposes. Because not all the institutions will be able to comply with the standards on commencement of the scheme, AFIC will, in the published standards, provide for transitional periods for compliance.
Interstate societies wishing to trade in the ACT will be required to be registered as foreign societies under the Financial Institutions Code. To be eligible for such registration, they must comply with the prudential standards published by AFIC. Societies already trading interstate which do not meet the prudential standards on commencement will be subject to the same transitional timetable for compliance as applies to activities in their home State or Territory.
The regulations under the initial Financial Institutions Code have been approved by Chief Ministers and Premiers. Future regulations are to be approved by the Ministerial Council for Financial Institutions established by the financial institutions agreement.
The Bills now before the Assembly are consistent with proposed legislation to apply the Queensland codes as laws in all jurisdictions to implement the uniform supervisory scheme: The Financial Institutions (Application of Laws) Bill 1992 applies the Australian Financial Institutions Commission Code and the Financial Institutions Code as laws of the ACT; the Financial Institutions (Supervisory Authority) Bill 1992 establishes an ACT supervisory authority; and the Financial Institutions (Consequential Amendments) Bill 1992 makes consequential amendments to existing ACT legislation.
The Government supports the establishment and implementation of the financial institutions scheme, which incorporates high prudential standards and adequate depositor protection to achieve a stable environment for building societies and credit unions. The Bills now before the Assembly will ensure that the ACT is a full participant in the scheme.
Mr Deputy Speaker, I present the explanatory memorandum for the Financial Institutions (Application of Laws) Bill 1992.
Debate (on motion by Mr Kaine) adjourned.
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