Proposals for Australia's charity sector

Since the multimillion-dollar collapse of Banksia, Australian finance companies are facing substantially tougher regulation than is presently in place. Regulators have been increasing their focus on these types of organisations which behave like banks and conduct bank-like activities, but which are not regulated like banks.

The Australian Prudential Regulation Authority (APRA) have released a discussion paper setting out its intention to strengthen regulation applying to religious charitable development funds (RCDFs). RCDFs are funds established by religious organisations for the purpose of seeking investments from the public to help further their religious and charitable goals and objectives.

Though this fundraising activity meets the definition of ‘banking business’ under the Banking Act 1959, pursuant to an APRA Exemption Order, RCDFs can accept investments from retail investors without the regulatory oversight that applies to authorised deposit-taking institutions or ‘ADIs’ (essentially banks registered under the Banking Act 1959). RCDFs typically fundraise by issuing debentures to retail investors, which, generally speaking, gives the investor a regular or fixed interest amount for the term of the investment of funds (principal) which are repaid at the end of the term (maturity)…

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