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Religious Charitable Development Funds

Regulation Impact Statement – Australian Prudential Regulation Authority

On 30 March 2016 the Australian Prudential Regulation Authority (APRA) announced its intention to modify the current Exemption Order applying to religious charitable development funds (RCDFs). Under the new Exemption Order, after 1 January 2017, RCDFs will only be permitted to offer, issue or sell retail products to retail investors if the products have a minimum term or call period of 31 days. Under transitional arrangements, RCDFs can continue to make available existing products to existing retail investors until 1 January 2018. RCDFs will also be prevented from offering cheque account facilities and BPAY facilities to retail investors, or offering EFTPOS and ATM facilities to retail investors or affiliates in relation to retail products. RCDFs will not be able to use the terms ‘deposit’ and ‘at-call’ or derivatives of these terms in relation to retail products or in marketing to retail investors. RCDFs will continue to have to provide a prudential warning to retail investors, which includes a statement to the effect that an investment in an RCDF is not covered by the Commonwealth Government’s Financial Claims Scheme. A Regulation Impact Statement (RIS) was prepared by APRA and was assessed by the Office of Best Practice Regulation as compliant with the Government’s RIS requirements but not consistent with best practice because the conclusion that the preferred option in the RIS is likely to result in the highest net benefit was not clearly supported by the analysis in the RIS. The RIS estimates the proposals will increase regulatory burden by $440,000 per annum. The OBPR agreed to the regulatory costs.