Possible regulation challenge for Development Funds
The finance industry watchdog is preparing to target churches operating quasi-banks - multi-million-dollar enterprises offering loans and deposit services to customers but avoiding the strict regulations imposed on commercial banks.
The Australian reports that the Prudential Regulation Authority (ARPA) is warning churches they face being considered as financial institutions if they fail to prove their services are used for charitable purposes and not commercial gain.
The authority has sent a draft policy to several churches setting out eight conditions the church-run organisations need to satisfy to remain exempt from the provisions of the Banking Act.
While many major churches - including the Catholic, Anglican and Uniting churches - offer financial services, sources told the paper yesterday that the main targets of the APRA crackdown are the more entrepreneurial evangelical churches.
Congregations such as the 18,000-strong Hillsong Church in Sydney make no secret of their bank-style activities.
Hillsong Emerge is a division of the church that has an enterprise development arm, using cash contributions to make loans to small businesses, purportedly to alleviate poverty.
The Assemblies of God operates a national financial services company that trades as Australian Christian Services.
Fr Brian Lucas, secretary of the Australian Catholic Bishops Conference, said APRA had always granted exemptions to the church's 24 development funds, which pay interest on money invested by parishioners.
Less than 15% of money collected for the funds was from parishioners, with the rest coming from internal church funds from organisations in the wider Catholic community, such as schools and hospitals.
"APRA may have a concern that some funds (operated by churches) don't have a charitable purpose and are seeking simply to run a commercial operation outside the Banking Act," Fr Lucas said. "I'm firmly of the view that this does not apply to any Catholic church funds."
God's banks to face crackdown (The Australian 28/10/05)
LINKS (not necessarily endorsed by Church Resources)
Australian Prudential Regulation Authority
Australian Christian Services
Catholic Development Fund Tasmania
Catholic Development Fund, Archdiocese of Melbourne
Catholic Development Fund Wollongong
Catholic Development Fund - Diocese of Maitland-Newcastle
Catholic Development Fund WA
28 Oct 2005