Advice requested by the Minister

The Select Committee has recommended that the Bill be amended to provide explicitly that the advice that may be requested by the Minister must be connected with the functions of the Bank, and to confirm that this advisory function must not limit the Bank in the performance of its primary monetary policy function (Part 1, Clause 8, substituting Section 33 of the Act).

Confidentiality

The Select Committee has recommended that it be made clear that information collected by the Bank from non-bank financial institutions must remain confidential to the Bank, unless it is shared in statistical form with persons with a proper interest, or with the consent of the person from whom it is collected (Part 1, Clauses 8A, amending Section 36 of the Act by inserting new subsection (6)).

Conflict of interest restrictions

The Select Committee has recommended, that the Governor and Deputy Governor of the Bank be prohibited from holding interests in deposit takers (Part 1, Clauses 8B, amending Section 46(1)(b) of the Act).

Exemptions

The Select Committee has recommended the deletion from the Bill of the requirement for the Bank to consult when granting an exemption from regulatory requirements. It is also recommended that a certain test must be met before an exemption may be granted. This test is that:

• the exemption will be consistent with the maintenance of a sound and efficient financial system;
• compliance with the relevant provision or provisions would, in the circumstances, require the deposit taker, class of deposit takers, or trustee to comply with requirements that are unduly onerous or burdensome; and
• the extent of the exemption is not broader than what is reasonably necessary to address the matters that gave rise to the exemption (Part 1, Clause 11, inserting New Part 5D into the Act, amending New Sections 157E(1)), 157F, 157G and 157J).

Transition period for credit rating requirements

The Select Committee has recommended that the Bill be amended to provide that the credit rating requirements come into force 18 months after the commencement of the Act (Part 1, Clause 11, inserting New Part 5D into the Act, New Section 157I; Clause 12).

Management, governance, enforcements, legal and procedural matters

The Select Committee has made many recommendations relating to amendments in relation to the risk management, governance, enforcement, legal and procedural requirements in the Bill. In particular, it has defined with more precision the nature of various duties which repose in a trustee [2]   of a deposit taker. For example, trustees would be required to report to the Reserve Bank only "material non-compliance" on the part of a deposit taker rather than just any "non-compliance" (amending Clause 11, inserting New Part 5D into the Act, New Section 157ZE). A reasonableness test is also recommended in relation to trustees forming an opinion as to what constitutes such "material non-compliance" (amending Clause 11, inserting New Part 5D into the Act, New Section 157ZF). The Select Committee has also recommended that search warrants may be issued by a District Court as well as by the High Court (amending Clause 11, inserting New Part 5D into the Act, New Section 157ZL). It is also recommended that the legal privileges that would apply in relation to enforcement powers would be consistent with those that apply for evidentiary purposes in proceedings (Clause 11, inserting New Part 5D into the Act, inserting New Section 157ZLA and amending New Section 157ZJ). A defence is recommended to be made available for deposit takers where contravention was due to the actions or default of another person, or in any way beyond the defendant's control, and the deposit taker took reasonable precautions and exercised due diligence to avoid the contravention (Clause 11, inserting New Part 5D into the Act, inserting New Section 157ZQA).

Review of the regime

The Select Committee has recommended that the new deposit takers regime must be reviewed within five years of the commencement of this Bill. The findings of the review would be reported to the Minister of Finance and presented by him or her to the House of Representatives (Clause 11, New Part 5D, inserting New Section 157ZUA into the Bill).