Document ID: chunk:federal_register_of_legislation:F2023L01225:body:0:p11
Version: federal_register_of_legislation:F2023L01225
Segment Type: other
Provision Reference: 
Character Range: 32048–34926

ADI.

    An ADI must use the same general principles in the treatment of these transactions as set out in paragraphs 10-22 of this Attachment.  The objective of the principles is to ensure, as far as practicable, that both sides of a transaction are treated the same.  That is, either both stand or both are unwound.

Declaration of a direct participant
    10.         The Australian Payments Network Limited's (AusPayNet's) Australian Paper Clearing System (APCS) has been determined by the RBA to be a 'recognised settlement system' under the Cheques Act. The effect of this is that cheques, including Financial Institution Cheques, drawn on an ADI that becomes a 'failed financial institution' (within the meaning of subsection 70A(2) of the Cheques Act) after the cheque is lodged and before the cheque is settled are taken to be dishonoured.[9] Accordingly, for the purpose of calculating an end-of-day balance, any cheques debited to an account by a declared ADI in connection with unsettled cheques must be reversed. Similarly, credit entries made by other ADIs to an account arising from unsettled cheques drawn on the declared ADI must also be reversed.

    11.         Cheques drawn on an ADI, other than the declared ADI, and deposited into accounts at a declared ADI prior to the commencement of statutory management remain obligations due to the declared ADI by the ADI on whom the cheque is drawn. When calculating the end-of-day aggregate deposit balance, the declared ADI must ensure that credits associated with these cheques are posted to accounts as they normally would be. However, these deposits would remain subject to the standard APCS rules on cleared funds (i.e. cheques drawn on an ADI, and deposited at the declared ADI, could be dishonoured by an ADI if, for example, the drawer had insufficient funds in their account). As a result, end-of-day deposit balances must distinguish between 'cleared' and 'uncleared' funds. APRA will only make FCS payments to account-holders in respect of cleared funds.

    12.         Legislation similar to the Cheques Act does not exist in respect of other payments instruments. Treatment of accounts in respect of non-cheque payment instruments may be influenced by non-AusPayNet contractual requirements. To the extent that contractual requirements are either silent, or allow discretion to be exercised, ADIs must adopt uniform accounting treatments in dealing with a declared ADI.

    13.         The exchange of direct entry debit and credit items will cease from the time that an ADI is withdrawn from the payments system. Specifically, items that were exchanged, but not yet settled, prior to the ADI's withdrawal must be treated as follows:

       (a)          direct entry credits received from a declared ADI would be returned to the declared ADI if they had not already been posted to accounts