Gilbert + tobin - Gilbert and Tobin

8. Banking
8.1 Australia’s banking system
The key lending institutions in the Australian financial system
consist of commercial banks, retail banks and investment banks
(including branches and subsidiaries of foreign banks). Non-bank
financial institutions also operate within the system.
The key regulator of the banking system is the Australian
Prudential Regulation Authority (APRA) which ensures that
organisations in the Australian financial services industry manage
their risk appropriately and that the stability of the financial system
is not jeopardised.
APRA is also the body which determines whether to authorise an
entity to conduct banking business and grants authorities under
the Banking Act 1959 (Cth) for authorised deposit-taking
institutions. Once authorised, it is possible for a foreign bank to
conduct business in Australia either through an authorised branch
or an authorised locally incorporated subsidiary which can engage
in the full spectrum of banking activities. However, authorised
foreign bank branches in Australia are prohibited from engaging in
retail banking (taking deposits of less than $250,000 from the
public).
8.2 Direct lending in Australia
There are a number of issues that may impact on a foreign
company engaged in direct lending in Australia.
(a) Australian financial services licences (AFSLs)
As noted in section 7, all persons who carry on a financial services
business in Australia are required to have an AFSL or have the
benefit of an exemption from this requirement. Lenders are,
generally speaking, not covered by this licensing regime, but most
other types of financial services are covered.
(b) Financial Sector (Collection of Data) Act 2001 (Cth)
This act requires a corporation to register and provide periodic
reports if, among other things, 50% or more of its assets in
Australia consist of debts owed to the corporation as a result of
transactions entered into in the course of providing finance. A
debt owed by an Australian borrower is likely to be regarded as
situated in Australia.
(c) Anti-Money Laundering and Counter-Terrorism
Financing Act 2006 (Cth)
As noted in section 17, this act regulates designated services
carried on through a permanent establishment in Australia, which
includes a place in Australia where the entity carries on business
through an agent.
(d) Foreign investments
As outlined in section 2, foreign investment in Australia is regulated.
The restrictions extend to the acquisition of “interests” in shares,
assets of a business or urban land and so can be triggered by the
grant of a security interest. There are limited exemptions in the case
of interests which are held by persons whose ordinary business
includes the lending of money if the interest is held solely by way of
security for the purposes of a money lending agreement.
(e) Business conduct
The Australian Securities Commission Act 1989 (Cth) sets out
prohibitions on misleading and deceptive conduct in respect of a
broad range of financial services and unconscionable conduct in
respect of business transactions. There is also specific legislation in
each state and territory which deals with the review of unjust
contracts.
A range of legislation exists in respect of lending to consumers and
this is discussed in section 11.
(f) Security
Security can be taken over most assets such as land, shares, bank
accounts, receivables, insurances, goods and equipment.
Most securities over property (other than land) are required to be
registered under the Corporations Act 2001 (Cth)
(Corporations Act), which currently contains the principal
registration regime for securities granted by Australian companies.
Registration of a registrable charge is mandatory and an
unregistered registrable charge will be void as against a liquidator
or administrator. In addition to (or, in some cases, instead of)
registration under the Corporations Act, a number of other state
and territory-based registers may be applicable (such as the
registration of interests in land, statutory liens and bills of sale).
A new personal property securities regime commenced
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