APRA pulls leash on foreign banks

The banking regulator is cracking down on uneven and in some cases non-compliant disclosure by foreign banks on the caution they give to customers regarding the protection of their deposits.

The Australian Prudential Regulation Authority yesterday said it would issue a class approval setting out the manner in which disclosures should be made by foreign ADIs.

The proposed class approval provides that, before accepting an initial deposit from a person in Australia, a foreign ADI must provide a written statement to the prospective depositor that clearly sets out that depositor protection provisions in the Banking Act do not apply.

APRA said a review "highlighted inconsistencies in the wording and application of this requirement by foreign ADIs.

"Also, there have been amendments to the depositor protection provisions to include the financial claims scheme" since the registration of most foreign ADIs.