APRA said it had originally planned to withdraw the exemption, but altered the proposal following feedback from RCDFs objecting to the restructuring costs that would be required.
Under the new proposals, which would apply from 1 January 2015, RCDFs will no longer be able to raise funds from retail investors on an at-call basis.
APRA argued retail investors could confuse at-call products with transactional accounts offered by authorised deposit-taking institutions (ADIs).
RCDFs would also be restricted from offering BPAY facilities with products offered to retail investors for the same reason. RCDFs would be able to continue to make or receive payments, including new retail investments, via BPAY.
The terms ‘deposit’ and ‘at-call’ will also be restricted under APRA’s new conditions.
Another proposed requirement is that any account offered to a retail investor lacking a stated maturity date must have at least a 31-day notice period prior to any withdrawal. Any term investment would also need to have a stated term of at least 31 days.
On the maturity of a term investment, an RCDF can re-pay the investor with funds via cash, cheque or direct credit; otherwise, funds must be rolled over into a new investment with a minimum term of 31 days.
APRA would also restrict RCDFs from offering BPAY payment with products offered to retail investors, as these types of facilities are associated with ADI transaction accounts.
APRA’s initial plans were to withdraw the current RCDF exemption order completely. This would have meant that any RCDFs wishing to offer retail-type products would have to do so under another regulatory regime.
RCDFs argued that operating under alternate regimes would be an administrative burden and the associated costs would impede the religious and charitable work of RCDFs.
This could consequently have a negative impact on the provision of services such schools, hospitals, aged care and social welfare programs, the submissions argued.
APRA said it therefore chose to revise its original proposal, as it would still be able to meet its original objectives with a less significant cost to RCDFs.
