Explanatory Memorandum
(Circulated by authority of the Minister for Financial Services and Regulation, the Honourable J.B. Hockey, MP)10 - Schedule 7 - Amendment of the Reserve Bank Act 1959
| Schedule 7 will amend the Reserve Bank Act 1959 to disqualify from RBA Board membership any person who is a director, officer or employee of an ADI. Currently, the disqualification only applies to directors, officers or employees of banks. Now that non-bank ADIs are becoming more like banks and both are regulated by APRA, it is appropriate to extend this disqualification to all ADIs. |
10.1 Schedule 7 will commence on the day this Bill receives Royal Assent.
10.2 Currently a person who is a director, officer or employee of a bank is disqualified from RBA Board membership. Now that non-bank ADIs are becoming more like banks and are regulated by the same body (APRA) limiting this disqualification to only banks is not sufficient. Therefore the proposal extends this disqualification to all ADIs.
10.3 Conflict of interest is a difficult and sometimes sensitive issue. While the proposed amendment would address the most obvious conflict of interest, most remaining potential Board appointees are likely to have some conflict of interest as most businesses and individuals are affected by interest rate changes and could make use of any confidential information in this regard. Conflicts of this type are currently addressed by the provisions in the Commonwealth Authorities and Companies Act .
10.4 The transitional provisions continue any current Board appointments that may be affected by the change in the disqualification provision.