The Australian Prudential Regulation Authority (APRA) today released final authorisation guidelines for -

*        Specialist Credit Card Institutions (SCCI); and

*        a new prudential standard on risk management of credit card activities for Authorised Deposit-taking Institutions (ADI). 

The new standard comes into force on 1 August 2003 and applies to all ADI credit card operations.

There have been no substantial changes to the draft authorisation guidelines and prudential standards released for industry consultation in August 2002, other than to allow foreign credit card banks an additional option to operate as SCCI branches (as opposed to SCCI subsidiaries) under the new regime.

The new SCCI model is designed to increase competition in the Australian credit card market by facilitating entrance to the four-party credit card schemes. The new institutions will be supervised by APRA and authorised only to issue credit cards and/or acquire credit card transactions from merchants, and perform any other services related to credit card issuing and/or credit card acquiring.

SCCIs will be subject to the same authorisation, prudential and reporting requirements applicable to traditional banks and other ADIs. However, they will be required to maintain a higher minimum capital ratio than a traditional ADI, reflecting their concentration of risk in one business line, but subject to a lower levy amount similar to that of foreign bank branches. ADI levies for 2003-04 are available on the Minister for Revenue and Assistant Treasurer’s website http://assistant.treasurer.gov.au.