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.
- RegTech adoption (HKMA): the Hong Kong Monetary Authority (HKMA)has launched a new Regtech Adoption Practice Guide series to provide banks with detailed practical guidance on the implementation of Regtech solutions. The publication of the Regtech Adoption Practice Guide series forms part of the HKMA’s two-year Regtech promotion roadmap announced in November 2020. The inaugural issue provides guidance on “Cloud-based Regtech solutions”. With ever increasing regulatory demands, and regulators investing heavily in technology themselves, seriously considering RegTech solutions (such as Gadens breach manager here) to keep up with demands is a must for banks in my view — my top read for the week, I think the HKMA’s efforts are commendable here!
- Financial reports (ASIC): ASIC reviewed the financial reports of 85 listed entities for the year ended 31 December 2020. The review was conducted as part of ASIC’s ongoing risk-based reviews of financial reports, and identified some entities with businesses adversely affected by the pandemic that did not appear to give sufficient attention to the reporting of asset values and financial position. Earlier in the year, ASIC made public announcements about LawFinance Limited and Ainsworth Game Technology Limited who later made negative adjustments profit of $53.5 million and $32.4 million respectively. ASIC stated that: “Our findings emphasise that directors and auditors need to focus on impairment of non-financial assets, particularly as businesses navigate through the continuing impacts of the COVID-19 pandemic.”
- ASIC (Parliamentary Committee): ASIC’s new Chair, Joe Longo, has addressed the Parliamentary Joint Committee on Corporations and Financial Services for the first time last week. Perhaps the most interesting point that I extracted, though unsurprising in nature given recent criticisms, is that Mr. Longo is considering ASIC’s operating model and organisational structure in its key internal operations and processes, including corporate services, information technology, finance, people and development, and compliance. When you take a look at ASIC’s organisational structure here, with the strange historical overlap between Commissioners and function heads, that focus can only be a good thing…
- Financial Regulator Assessment Authority (Treasury): the Financial Regulator Assessment Authority Bill 2021 has been passed by Parliament, which establishes a new independent body, the Financial Regulator Assessment Authority (FRAA), to regularly review and report on the effectiveness and capability of ASIC and APRA. The FRAA will consist of three independent statutory appointees, and its biennial reports on the regulators’ effectiveness and capability will be tabled in the Parliament.
- Financial advisers (Parliament): the Financial Regulator Assessment Authority Bill 2021(Cth) has been introduced. This legislation tackles some of the disciplinary issues that Commissioner Hayne identified with financial advisers, including by: expanding the role of the Financial Services and Credit Panel within ASIC to operate as the single disciplinary body for financial advisers to ensure that less serious misconduct does not go unaddressed; creating new penalties and sanctions for financial advisers who have breached their obligations under the Corporations Act 2001 (Cth); introducing a new registration system for financial advisers to improve the accountability and transparency of the financial services sector; and, transferring functions from FASEA to the Minister responsible for administering the Corporations Act and to ASIC to streamline the regulation of financial advisers. It also introduces a single registration and disciplinary system under the Corporations Act 2001 (Cth) for financial advisers who provide tax (financial) advice services.
Thought for the future: research published by the UK FCA estimates that about 2.3 million UK adults now hold cryptoassets (up from 1.9 million last year). Clearly the demand for cryptoassets is not going anywhere; now for the regulation to catch up. While ASIC made good headway early on in giving guidance on cryptoassets and when they will fall within its remit, its position in 2018’s Information Sheet 225 is greyer than the UK’s FCA current guidance, which has set out a clear “regulatory perimeter” to clarify when crypto assets will fall within its regulatory remit. Time for a refresh!