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 conduct”: the ACCC’s Chairman, Rod Sims, has restated that a new “unfair conduct” provision should apply across the economy, replacing “unconscionable conduct” provisions in legislation (and in equitable law), which a number of interest groups and some judges consider too narrowly framed. (To make out an argument of unconscionable conduct, something more than unfairness needs to be proved — the conduct must be against conscience as judged against societal norms. It must be particularly harsh and oppressive.) The comments proceed from his similar statements to the Law Council on 30 August 2019. Following Justice Perram’s recent judgment in ASIC v. Westpac, in which ASIC lost its argument that Westpac had breached responsible lending laws (although ASIC has just appealed), which drew some ire from consumer groups for allusions to consumers cutting down on Wagyu beef and fine shiraz, Mr. Sims stated: “It’s up to the legislature to be clear about what they mean, and if what they mean is unfairness, which I think they do, then we should change the test to that.” (Emphasis added.) I think this would be a tricky legislative undertaking which would take a lot of consultation to get right — and it would occur against the backdrop of some very real regulatory fatigue creeping in…
- Cartel immunity: the ACCC will have a new cartel immunity and cooperation policy from 1 October 2019. It will modify the existing 2014 policy, under which firms and individuals can apply for immunity from civil and criminal proceedings for cartel conduct. Key changes to the new policy include the need for firms / individuals to enter into a cooperation agreement with the ACCC, which will set out the relevant conduct (US, and now UK, firms with DPA / NPA experience are likely to be in familiar territory here), and certify their compliance in terms of co-operation with the ACCC’s evidence-gathering phase e.g. making available all relevant witnesses etc. Interestingly, there is a new online portal — protected by some high tech encryption — which facilitates anonymous reporting of potential cartel conduct. Together with the broader legislative reforms, 2019 is definitely a watershed year for Australian whistle-blowing.
- Breach reporting: still staying with the ACCC, which has had a busy week, it launched proceedings against Medibank Private over alleged misrepresentations to about 800 customers of its budget brand AHM which rejected claims for things such as joint investigations and reconstruction procedures which should have been paid. The interesting feature is that Medibank Private voluntarily reported the breaches to the ACCC after receiving customer complaints. (Medibank Private also set up a remediation program.) Mr. Sims said to the AFR (4 September) “You don’t want a culture where companies can have a lot of compliance people and when they find out they’ve done something wrong, they know they’ll always get away with it if they self-report. That sort of culture can’t work.”
- Unfair contracts terms: ASIC has also been busy — it has sued BoQ and Bendigo & Adelaide bank for having allegedly unfair contract terms in their small business contracts. ASIC contends that some terms, which will be familiar to bankers, lawyers and insolvency practitioners in the distressed banking space — see para 4 of ASIC’s Concise Statement, are unfair as the terms cause significant imbalance in rights as between the banks & small business, are not reasonably necessary to protect the banks’ interests and would cause detriment to the small business if relied upon. ASIC’s thinking on UCT was recently put on display in its updated INFO 211 in August 2019 here. Depending on how these cases pan out, it could spell appreciable redrafting across the banking industry in the future.
- Joint Committee: finishing on a forward-looking note, the Parliamentary Joint Committee on Corporations and Financial Services (list of members here) sits this Friday, 13 September 2019. It monitors activities of ASIC, the Takeovers Panel and the Corporations Legislation. It has a full day of hearings booked in with ASIC’s top brass and will therefore be one to watch closely!
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(These views are my own and do not constitute legal advice. Photo credit Tom Wheatley)