AUSTRALIA
The Australian
DAN BOX THE AUSTRALIAN APRIL 02, 2014
CHURCHES will be barred from offering “easy access” bank-style accounts to their parishioners amid tough new restrictions proposed by the national regulator in a crackdown on more than $1 billion in investments held in unregulated church-run funds.
The changes, to come into effect in June, follow the revelation in The Australian some Catholic Church-run funds are effectively making a profit from investing the billions of dollars they receive each year in government grants for schools.
The Australian Prudential Regulation Authority initially proposed to end the exemption for religious charitable development funds from the need to be regulated under the Banking Act, but revised this after discussions with church groups.
A number of the 59 such funds nationwide, which control more than $7bn in assets between them, have recently been aggressively pursuing retail investors, including children and families, offering at-call deposit accounts at shopfront offices in regional towns.
These investors typically pay no fees and receive a guaranteed return, often below market rate, while the church pools their money with other assets invested with commercial banks at a higher rate, ultimately generating multi-million-dollar tax-free surpluses every year.
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