Permanent building societies and credit unions in Western Australia will come under the scrutiny of a new supervising authority from next week.
Attorney General Joe Berinson said the Western Australian Financial Institutions Authority (WAFIA) had been established as part of a national agreement to bring building societies and credit unions under stricter control and prudential management.
He said all States and Territories had agreed to new uniform standards and practices to enhance the prudential standing of the industry and provide greater protection for depositors. The new standards, which would come into force nationally on July 1, would be supervised in Western Australia by WAFIA.
They would be based on Reserve Bank prudential requirements and include a risk weighted capital adequacy requirement, a prime liquid assets requirement, limitations on large exposures, control over subsidiaries, and a range of risk management systems.
The new national code would require all building societies and credit unions to contribute funds to support a building society or credit union in an emergency situation.
This would be done by requiring that each had available to the Australian Financial Institutions Commission half of its required prime liquid assets to lend.
Each building society and credit union would also be required to identify assets to be retained unencumbered for the purpose of providing security for a loan if liquidity support was needed.
WAFIA, which would replace the office of the Registrar of Co-operative and Financial Institutions, would exercise day-to-day supervision of the scheme in WA.
Mr Berinson said Mr Patrick Edward Ryan, the current non-executive director of Challenge Bank Ltd, had been appointed chairperson of the three-member, part-time WAFIA board.
Mr Ryan had previously held positions as managing director of Challenge Bank, general manager and director of City Building Society, and chief general manager/chief operating executive for Perth Building Society Group of Companies.
The deputy chairperson would be Mr Kevin John Edwards, chairman of partners and senior partner at law firm Mallesons Stephen Jaques. Mr Edwards was a former commissioner of the National Companies and Securities Commission (1986-90).
The third member of the board would be Mr Brian Steggall, a chartered accountant and senior audit partner with Coopers & Lybrand, Perth.