Credit unions, mutual building societies and mutual banks are Authorised Deposit-taking Institutions (ADIs) and are subject to the strongest regulatory framework in the financial sector.
ADIs are subject to close supervision by the Australian Prudential Regulation Authority (APRA) under the Banking Act 1959. All ADIs – banks, building societies and credit unions are subject to the same, strict, legally-enforceable prudential standards on capital, liquidity, risk management and governance.
Deposits with credit unions, mutual building societies and mutual banks of up to $250,000 will be covered on a permanent basis by the Government guarantee from 1 February 2012.
In addition to their licence to carry out banking business, all credit unions, mutual building societies and mutual banks hold an Australian Financial Services Licence (AFSL) and are regulated by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001. AFSL holders are subject to a range of licensing, conduct and disclosure obligations.
Credit unions, mutual banks and mutual building societies are also subject to regulatory obligations under a range of laws, including:
- consumer credit law;
- the Privacy Act 1988;
- the Anti-Money Laundering and Counter-Terrorism Financing Act 2006;
- payments system regulation;
- the Electronic Funds Transfer Code of Conduct; and
- the Mutual Banking Code of Practice.
Friendly societies offering financial products are regulated by APRA under the Life Insurance Act 1995 and by ASIC under the Corporations Act 2001.