Mackay Chapman March 2025 APRA Update

In this month’s APRA update:

• APRA revokes Lutheran Laypeople’s League of Australia’s banking licence;
• Clarification on expectations regarding commercial property lending;
• APRA statement on BUSSQ Federal Court appeal; and
• Proposal of updated approach to treatment of HELP debts.

APRA revokes Lutheran Laypeople’s League of Australia’s banking licence

APRA has agreed to Lutheran Laypeople’s League of Australia Limited's request to revoke its licence to operate as an ADI and revert to a Religious Charitable Development Fund.

The updated list of all APRA-authorised ADIs is available on the APRA website at: Register of authorised deposit-taking institutions. 

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APRA clarifies expectations regarding commercial property lending

APRA has published a letter to ADIs clarifying its expectations of pre-sales and commercial property lending.

The letter can be found on APRA's website.

APRA statement on BUSSQ Federal Court appeal

In August 2024, APRA imposed additional licence conditions on BUSS (Queensland) Pty Ltd, the trustee for The Building Unions Superannuation Scheme (Queensland) (BUSSQ), to safeguard member interests and effectively address prudential concerns. 

These measures ensure transparency in BUSSQ's response to the identified issues.

The BUSSQ Board sought judicial review of APRA’s decision despite being aware that internal review is a more cost-effective alternative. 

In a judgment handed down on 31 January 2025, Justice Derrington determined that BUSSQ should have used the internal review process rather than applying to the Federal Court. The Board has since appealed this decision, and APRA is considering the notice of appeal.

Trustees of superannuation funds are required to act in the best financial interests of their members and ensure proper assessment of their directors' fitness and propriety. APRA’s decision to impose additional licence conditions was driven by prudential concerns regarding BUSSQ’s compliance with these obligations.

APRA proposes updated approach to treatment of HELP debts

APRA has commenced consultation on proposed changes to how banks treat HELP debt repayments when assessing home loan applications.

Currently, banks include HELP debts in their debt-to-income ratios when evaluating applicants' ability to service home loans. However, APRA acknowledges that HELP debts differ from other debt obligations, as repayment amounts are based on income rather than debt size or interest rates.

APRA expects to incorporate these changes into its prudential framework in the second half of the year, subject to feedback from the consultation. More details are available on the APRA website.

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The contents of this article do not constitute legal advice and it is not intended to be a substitute for legal advice and should not be relied upon as such.  It is designed and intended as general information in summary form, current at the time of publication, for general informational purposes only.  You should seek legal advice or other professional advice in relation to any particular legal matters you or your organisation may have.