Changes to exemptions to the Electronic Transactions Act 1999 (Cth) yield mixed bag for banking industry

On 29 July 2020, the Commonwealth Government passed the Electronic Transactions Regulations 2020 (Cth) (Regulations), with changes to the scope of Commonwealth legislation that were wholly or partially exempt from the provisions of the Electronic Transactions Act 1999 (Cth) (Act) (Electronic Transactions Act). Exemption from the Act previously had the effect that requirements for writing, signature, production and retention of documents in the exempt legislation could not be satisfied by electronic communications.

Changes to the scope of exemptions for the National Credit Code in Schedule 1 of the National Consumer Credit Protection Act 2009 (Cth) are useful for the banking industry, and streamline operations in light of continuing COVID-19 pandemic restrictions.

Conversely, changes to the scope of exemptions in relation to the Banking Act 1959 (Cth) have made it harder to respond to certain requests from APRA.

National Credit Code (NCC)

Sections 8, 57(1), 59(2)(a), and 61 of the NCC have been removed from the scope of exemptions under the Electronic Transactions Act.

These changes now allow credit providers to discharge their obligations to provide:

• guarantees;
• copies of guarantees; and
• information regarding any increase in liabilities under guarantees,

through electronic communications.

Banking Act 1959 (Cth) (Banking Act)

Sections 13B(1), 14A(2), 16AK(1), 16B(1), 61A, and 62E of the Banking Act have been included in the scope of the exemptions under the Electronic Transactions Act.

These changes have the potential effect of preventing authorised deposit-taking institutions, statutory managers, auditors, and liquidators from responding to requests from the Australian Prudential Regulation Authority or investigators to provide information, such as books, accounts, and other documents, using electronic communications.

Further changes needed

The changes to the exemptions under the Regulations do little to change the legal position about the use of electronic communications and electronic signatures in the banking industry, and further changes are required.

The practical effect of lockdowns during the COVID-19 pandemic have highlighted the need for a review of the electronic transaction regime, and aggravated the effect of pre-existing limitations to the conduct of essential transactions digitally. These have included requirements for having documents witnessed in person, providing or receiving physical documents by post or personal delivery, and for signing documents in the presence of others including witnesses (in some cases witnesses that need to meet a legal qualification).

While emergency reforms have been put in place to provide temporary relief from stringent signing and witnessing requirements, there is a clear need for more meaningful, permanent changes to the various electronic signing and witnessing legislation to keep pace with transactions in the digital economy.

Authored by:

Antoine Pace, Partner
Peter Grtojan, Partner
Raisa Blanco, Associate