Law of Financial Institutions and Securities Assignment
Student ID: 3805720
Breach the Law
The characteristics of accounts
Assess the legal correctness of the statements made by GFC
This essay describes the case about relationship between customer GFC Bank, and financial planner, Jane. It discussion of the legal activities discussion involved in the case which combine d all relevant sources of law, legislation, common law and Industry Codes. Banking Law regulate the bank. In addition, it keeps right of customers.
The purpose of the Banking Act 1959 (Cth) is to regulate Banking. APRA is the prudential regulator of banks. The Act provides for the prudential supervision and monitoring of banks by APRA, licensing by APRA of ‘authorised deposit-taking institutions’ (ADIs’) which include banks, credit unions, and building societies. Furthermore, the Act declares that any corporation which wants to do the business of banking may apply to APRA for the authority to do so: s 9. In addition, there are powers given to APRA which may be exercised for the protection of depositors.
The articles ‘APRA warns banks over home loans’ and ‘APRA calls halt to riskier lending’ reflected role and powers of APRA. ‘APRA is not worried the local mortgage market is shaky, but it is concerned to ensure that mortgage are a larger proportion of the country’s banking system – riskier lending practices don’t become industry norms.’ They also worry the lower overall growth in mortgage lending has led to overly aggressive competition. APRA supervises the deposit-taking institutions on anytime. If the bank approved too much loan, that will lead to a financial crisis, like the US crisis. In fact, APRA concerns riskier lending practices. The article mentions that APRA reiterated the need for appropriate pricing, adequate loan-to-valuation ratios, loan serviceability and other risk criteria. In addition, APRA also considers some factors: how price rises for housing are built into valuation models, loans to first-home buyers who may be carrying debt already, and whether the drive for market share is reflected in lower hurdles for potential borrowers.
Operating under APRA ACT 1998 and powers derives from banking act 1959, insurance Act 1973, life insurance ACT, superannuation industry act 1993. One of the functions of APRA is to encourage and promote sound practice in relation to prudential matters: Banking Act 1959 (Cth) s 11B(b). APRA should collects and analyses information of prudential matters: s 11B(a). Furthermore, APRA is also required to evaluate the effectiveness and carrying out of practices related to prudential matters: s 11B(c). In addition, Section 11A of the Banking Act authorises the Regulations to require ADIs and authorised NOHCs to observe prudential standards specified. APRA is given power to develop prudential standards: s 11AF. It has released prudential standards, the ‘harmonised’ prudential standards that apply to all ADIs. There are five jurisdictions should be supervised by APRA. First of all, capital adequacy is of fundamental importance to ensure that an ADI has sufficient reserves to see it through times of difficulty. ARPA should consider four basic characteristics of an ADI’s capital. Second one is liquidity. According to APS 210, an ADI must inform APRA immediately of any concerns it has about its current or future liquidity. ADI must report its liquidity position to APRA on a quarterly basis. Thirdly, it is risk exposure. Fourthly, APRA should concern the relationship of banks to these other organisations. Last but not least, it is lending policies.
AISC is Australia’s corporate, markets and financial services regulator. It operates ASIC Act 1989 and Corporations Act 2001. AISC enforces and regulates...
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