Keeping on top of the latest financial services regulatory & compliance trends?
Investing time in your professional development within a rapidly changing financial services industry is challenging. To meet that challenge, the Australian regulators weekly wrap is designed to keep you at forefront of your practice by quickly setting out the top 5 developments from the past week, analysis and practical considerations for the future.
- COVID-19 Taskforce (ACCC): the ACCC has established an internal COVID-19 Taskforce which is communicating with businesses to educate them about their obligations in relation to cancellations, refunds and suspension of services as a result of COVID-19. The ACCC has said that its focus more broadly is on: 1) COVID-19 scams, which are unfortunately increasing; 2) ‘Price gouging’ for essential products. It is not illegal, but often accompanies misleading & deceptive conduct breaches i.e. explanations as to why the price has gone up; 3) affordability issues in sectors such as energy, communications and petrol; 4) potential authorisations that support coordination between competitors that is ordinarily prohibited but which are necessary and in the public interest at this time (eg the application by supermarkets allowing a coordinated approach to best ensure supply); 5) enforcement activities, as the ACCC will now carefully consider the impact on businesses already under pressure when making decisions about the scope and timing of statutory notices for the production of information and documents / minimise compulsory examinations; 6) mergers, particularly those with statutory timeframes which may need to be extended if there are challenges in conducting and completing the necessary inquiries with merger parties and market participants; and 7) the ACCC will continue to focus on product safety responsibilities — no changes there. The big one, being the Consumer Data Right i.e. open banking, is still being progressed in consultation with the Department of Treasury, and the ACCC is looking at ways of providing flexibility for participants where required. In my view, it should be deferred. It is a big enough change as is and far more ambitious than overseas’ equivalents e.g. the UK.
- Foreign investment (FIRB): to protect Australia’s national interest as it deals with the economic implications arising from the spread of the COVID-19, all proposed foreign investments into Australia subject to the Foreign Acquisitions and Takeovers Act 1975 (Cth) will now require approval. The change applies regardless of value or the nature of the foreign investor, and will be effected by reducing to $0 the monetary screening thresholds for all foreign investments under the Act. To ensure sufficient time for screening applications, the Foreign Investment Review Board (FIRB) will be working with existing and new applicants to extend timeframes for reviewing applications from 30 days to up to six months. The changes will severely curtail the ability of foreign investors to compete for M&A deals, real estate and other major assets in Australia. A protectionist policy, which was not totally unexpected, it could also cause existing transactions to fail because of FIRB conditions precedent.
- Basel III (APRA): The Australian Prudential Regulation Authority has announced it is deferring its scheduled implementation of the Basel III reforms by one year. The Basel III measures aim to strengthen the regulation, supervision and risk management of banks post the GFC e.g. increased capital buffers. You can read more about it here. The approach is consistent with the recent decision by the international Basel Committee on Banking Supervision to defer, from January 2022 to January 2023, the agreed start dates for the Basel III standards. This move has been expected, given that APRA is already allowing banks to reduce their capital buffers to withstand the COVID-19 disruption.
- Witnessing (Registrar): the Qld Registrar of Titles has provided some guidance on alternative witnessing provisions that can be used to assist in witnessing of documents. For example, where the transferor or mortgagor is in COVID-19 related self-quarantine or self-isolation. In those situations, it will be acceptable for the witness to view the individual signing the instrument live via some form of video link (e.g. Skype or Microsoft teams). The executing individual should hold the instrument up to the video link to enable the witness to confirm it is the relevant instrument and note or screenshot the terms of the instrument. (Where possible, the individual should also send a photo of the signed instrument to the witness.) The witness should confirm verbally with the individual what they have signed, either through the video or through a separate phone call. Once the individual has signed the instrument, the preferred action would be for the individual to have the instrument collected and delivered or posted to the witness. The witness would compare the instrument with their notes or photo and, if there have been no changes to the instrument, wet sign it as witness, and lodge it or deliver it to the appropriate person for lodging. If delivery is not possible, once signed (and watched via video link and confirmed verbally by the witness) the instrument could be scanned or photographed, then emailed to the witness who will print it and wet sign it, as witness. A sensible start, after concerted lobbying efforts (including from my firm). Now over to the Federal Government, which needs to urgently facilitate electronic execution for corporations under s. 127 of the Corporations Act 2001 (Cth).
- Privacy (OAIC): Privacy Commissioners and Ombudsmen around Australia have convened a National COVID-19 Privacy Team between the Office of the Australian Information Commissioner (OAIC) and states and territories with privacy laws to respond to proposals with national implications. That is an interesting development, if somewhat lacking in detail — are they going to cooperate on breach reporting? (In Qld, breach-reporting for privacy breaches is not mandatory, though ‘strongly encouraged’.) What is useful, however, is this guide that they have released setting out the 10 steps to undertaking a privacy impact assessment when developing or reviewing a project. There are many such projects in the works at the moment, responding to the changing working environment e.g. increased employees working from home.
Thought for the the future: in announcing how it is responding to COVID-19, the ACCC has been clear, direct and practical. For example, in relation to waivers around authorisations that support coordination between competitors it has said ‘The ACCC encourages any businesses or industry groups with enquiries to contact it directly via email@example.com. These matters will be progressed very quickly.’ APRA and ASIC should take note. Thusfar, their main contribution is that they will put internal consultations off until later in 2020. More is required though, including proactively issuing ‘no action’ letters and meaningfully engaging with necessary changes to the enforcement landscape.
Do you think I overlooked something or would like more information? If so, please send me a message!
(These views are my own and do not constitute legal advice. Photo credit Tom Wheatley)