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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- Unfair contracts terms: another week, another big development — this week it is Treasury’s release of the exposure draft of the Treasury Laws Amendment (Unfair Terms in Insurance Contracts) Bill 2019 (Bill) which extends the unfair contract terms protections to insurance agreements. (In certain settings, a term in a financial agreement is unfair and void if it causes significant imbalance in rights, is not reasonably necessary to protect legitimate interests and it would cause detriment — see the helpful page 7 of the EM.) There are two components to the Bill: first, amendments to the Insurance Contracts Act 1984 (Cth) to enable the regime; second, amendments to the ASIC Act 2001 (Cth) to tailor the regime. At present, the “main subject matter” of a finance agreement is exempt from the UCT regime — here the main subject matter will be limited by the description in the insurance policy (which will prove trickier than it sounds). Premiums will be exempt, provided they are transparent. Finally, third party beneficiaries of insurance contracts will be able to bring actions against insurers under the UCT regime. Long expected, nevertheless there is a lot for insurers to take in — and against the backdrop of the Design and Distribution / Product Intervention Powers (and BEAR down the line) as well!
- Digital platforms inquiry: the ACCC published its final report on the digital platforms inquiry which sets out its views on the impact of online search engines, social media and digital content aggregators on competition in the media and advertising services markets. In addition to making findings about concentration in those markets i.e. Google and Facebook, the report contains a number of recommendations. The most noteworthy ones include: an increase in focus on investigations and enforcement (continuing the current regulatory trend); strengthening of privacy laws; a tort for the serious invasion of privacy; prohibitions for certain unfair contract terms (not just making them voidable) & practices; IDRS frameworks for digital platforms. It is a interesting read, and will have far-reaching effects. The executive summary is here and I highly recommend it as weekly reading — public submissions close on 12 September 2019.
- Legal privilege: the Law Council of Australia has stated that it is working with the Australia Taxation Office to develop a new protocol to mitigate disputes around legal professional privilege. The announcement follows reporting in the Australian Financial Review (26 June 2019) which recorded that ATO Deputy Commissioner Mark Konza had said that taxpayers and businesses claiming privilege unreasonably should expect the ATO seek resolutions through the courts but that the ATO had “no plans to criminally prosecute lawyers over legal professional privilege claim”.
- Boardroom psychologists: ASIC’s trial of placing psychologists into boardrooms will now be looked at by a Parliamentary Committee. Liberal Senator James Paterson, the new chairman of the Parliamentary Joint Committee on Corporations and Financial Services, is quoted in the Australian Financial Review (30 July 2019) as stating “Their focus on culture and sending psychologists into boardrooms doesn’t seem consistent to me with what the royal commission asked them to do… regulating conduct and behaviour to enforce the law seems more like a direct route to address the problems”. The Senator is focused on reducing red tape in the sector.
- APRA biennial survey: APRA released its biennial survey from regulated entities and knowledgeable observers. Both groups “strongly believe that APRA’s supervision and enforcement of prudential requirements is benefiting the Australian community, strengthening their entity and positively impacting on their industry”. But almost all changes observed from the last survey in 2017 are downward, which is perhaps unsurprising in the wake of the Hayne Royal Commission.
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(These views are my own and do not constitute legal advice. Photo credit Tom Wheatley)