The Australian regulators weekly wrap is a weekly alerter which quickly sets out five noteworthy developments from the past week. It is designed to help you in keeping up to speed with what is happening in Australian financial services regulation.
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- Responsible lending: following ASIC’s release of its consultation paper in February 2019 in respect of updating its guidance on responsible lending (RG 209), ASIC announced that it intends to hold public hearings concerned with responsible lending practices (a prominent theme in the recent Hayne Royal Commission). An unusual occurrence, the hearings will take place in August 2019 and feature groups / individuals who provided a written submission to ASIC in response to the consultation paper. 64 of the submissions have now been made public.
- Whistleblowers: corporate whistleblowers — being those eligible as such because they meet certain criteria (always the first consideration) — now have stronger protections under the Corporations Act 2001 (Cth) as firms will commit an offence by revealing their identify or by causing them “detriment” and be liable for heavy civil penalties / compensation. Public companies and large private companies now have until 1 January 2020 to embed a compliant whistleblowing policy. Updating this framework can prove complex and take time, so affected companies should start now.
- BEAR: APRA has outlined its proposed approach to end-to-end product responsibility under the Banking Executive Accountability Regime (Australia’s version of the UK SMCR) to ADIs, proposing that they be required to identify and register an accountable person to hold end-to-end product responsibility for each product the ADI offers to its customers, including retail, business and institutional customers. The public consultation is open until 23 August 2019 for what will undoubtedly prove tricky accountability statements to draft given APRA “proposes a broad interpretation of what is in scope of end-to-end accountability, including not only all steps in the design, delivery and maintenance of all products offered to customers…but also extending to issues such as customer remediation, linkages to IT systems and data quality, outsourcing, and incentive arrangements”
- Product intervention: staying with financial (and credit) products, ASIC released a consultation paper as to how it proposes to wield its new product intervention power, a broad and flexible proactive power for it to intervene when a product has resulted, will result or is likely to result in significant detriment to consumers. (Other international jurisdictions will already be familiar with this power.) Among other areas, the paper sets out ASIC’s proposals as to the guidance it will give the industry on the meaning of consumer detriment and how it will arise. It also deals with the nature of the consultation process that ASIC proposes to undertake with firms in its cross-hairs. Public consultation is open until 7 August 2019.
- Code of Banking Practice: ASIC has approved an updated version of the Australian Banking Association’s new voluntary Banking Code of Practice. This is the first wave of updates to the code, and involves prohibition on charging fees for services to deceased customers and commitments around the provision of valuations to small business customers. The second wave of changes, which ASIC will decide on later this year, will be the more significant as they will be designed to address the recommendations of the Hayne Royal Commission. And in that regard, one of Commissioner Hayne’s more significant recommendations was that “there must be adequate means to identify, correct and prevent systemic failures in applying the code … in order to do that, some provisions of the codes should be picked up and applied as law” (Emphasis added.)
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(These views are my own and do not constitute legal advice. Photo credit Tom Wheatley)