15th Question

Will the Royal Commission ask the Governor of the Reserve Bank why its Payments System Board's 'Responsibilities and Powers webpage does not also list the Banking Act 1959 under legislation that governs the Payment Systems Board's responsibilities and powers?

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Section 50 of the Banking Act 1959 was relied upon to set deposit and loan interest rates upon commercial bank accounts, including capping Credit Cards @ 18% up until April 1985, as explained on page 13 and 14 of Reserve Bank Research Discussion Paper titled LOAN RATE STICKINESS: THEORY AND EVIDENCE  -  RBA 1992.   Credit Cards are Designated, deemed an Access Regime and Standards have been set by the RBA.  Hence, the ACCC's obligations were subrogated to the RBA.  If the Payments Systems Board was to ever set a Standard to regulate Credit Card interest rates, it would have to rely upon Part V—Interest rates  50 'Control of interest rates' of the Banking Act 1959.

The Banking Act 1959 contains the following references to the Payment Systems (Regulation) Act 1998):

Subdivision D—Administration

16AJ Requiring assistance

(1)     APRA may, by written notice given to any of the following persons, require the person to give APRA such reasonable assistance in the performance of its functions, and the exercise of its powers, under this Division as is specified:

         (a)     an ADI (whether or not it is a declared ADI);

         (b)     an administrator appointed under subsection 13A(1) to take control of an ADI’s business;

         (c)     a liquidator appointed in connection with the winding up, or proposed winding up, of an ADI.

(2)     Without limiting subsection (1), APRA may require a liquidator to assist APRA in APRA’s function of paying account holders their entitlements under Subdivision C.

(3)     For example, APRA may, by notice issued under subsection (1), require the liquidator to do the things specified in the notice, including:

         (a)     carrying on the business of the ADI so far as necessary, or doing any other act or thing, to facilitate APRA’s payment to account holders in accordance with Subdivision C; or

         (b)     seeking the re-entry of the ADI into a payment system (as defined in section 7 of the Payment Systems (Regulation) Act 1998); or

         (c)     transferring the entitlements of account holders to accounts held by the account holders in another ADI.

The Banking Act 1959 contains the following references to the Reserve Bank of Australia, in particular Part V—Interest rates  50 'Control of interest rates':

2 Commencement

Except as otherwise provided by this Act, this Act shall come into operation on the day on which the Reserve Bank Act 1959 comes into operation.

8 Only the Reserve Bank and bodies corporate that are ADIs may carry on banking business

11C Division not to limit operation of other provisions

Nothing in this Division is intended to limit the operation of any other provision of this Act or of the Reserve Bank Act 1959.

11CE Supply of information about issue and revocation of directions

Power to publish notice of directions in Gazette

(1)     APRA may publish in the Gazette notice of any direction made under Subdivision A or B or section 29. The notice must include the name of the ADI or authorised NOHC given the direction and a summary of the direction.

Requirement to publish notice of revocation of certain directions in Gazette

(2)     If APRA publishes notice of a direction made under Subdivision A or B or section 29 and then later revokes the direction, APRA must publish in the Gazette notice of that revocation as soon as practicable after the revocation. Failure to publish notice of the revocation does not affect the validity of the revocation.

Requirement to provide information about direction to Treasurer and Reserve Bank

(3)     If the Treasurer or the Reserve Bank requests APRA to provide information about:

         (a)     any directions under Subdivision A or B or section 29 in respect of a particular ADI or authorised NOHC; or

         (b)     any directions made during a specified period under Subdivision A or B or section 29 in respect of any ADIs or authorised NOHCs;

APRA must comply with the request.

16AE Advice and information for decision on making declaration

(1)     The Minister may give APRA, ASIC or the Reserve Bank a written request for advice or information about a matter relevant to making a decision about making a declaration under section 16AD (including a matter relating to the affairs of an ADI).

(2)     As soon as reasonably practicable after being given the request, APRA, ASIC or the Reserve Bank must give the Minister the advice or information about the matter.

(3)     In making the decision, the Minister must take into account the advice and information (if any) that he or she has been given before making the decision. This does not limit what the Minister may take into account in making the decision.

Part V—Interest rates

50     Control of interest rates

(1)     The Reserve Bank may, with the approval of the Treasurer, make regulations:

         (a)     making provision for or in relation to the control of rates of interest payable to or by ADIs, or to or by other persons in the course of any banking business carried on by them;

         (b)     making provision for or in relation to the control of rates of discount chargeable by ADIs, or by other persons in the course of any banking business carried on by them;

         (c)     providing that interest shall not be payable in respect of an amount deposited with an ADI, or with another person in the course of banking business carried on by the person, and repayable on demand or after the end of a period specified in the regulations; and

         (d)     prescribing penalties, for offences against the regulations, not exceeding:

                  (i)     if the offender is a natural person—a fine of $5,000; or

                  (ii)    if the offender is a body corporate—a fine of $25,000.