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.
- Anti-hawking provision (ASIC): ASIC has finally released its guidance (RG 38) setting out its expectations on the the hawking provisions in s992A and 992AA of the Corporations Act 2001 (Cth). Under these hawking prohibitions, a person must not, in the course of, or because of, an unsolicited contact with a retail client: offer financial products for issue or sale; or, request or invite the client to ask or apply for financial products. Working out what constitutes an unsolicited contact is harder than it appears, as it could be contact by telephone, face-to-face, or any other real-time interaction in the nature of a discussion or conversation to which the consumer did not consent. The guide explains how to comply with the hawking prohibition contained in s992A, and does contain a lot of useful clarifications. For example, the prohibition in s992A(1) applies to the making of offers, requests or invitations, not to the sale or issue that may result. It is not a defence that a consumer had or was given time after an offer, request or invitation to consider whether to proceed, nor that the consumer was ultimately not issued or sold the product. For those organisations affected e.g. lenders who also offer insurance products, now is the time to start to work on those anti-hawking policies.
- Financial advisers (ASIC): ASIC Chair Joe Longo has delivered a speech in which he has acknowledged the challenges facing financial advisers, and that the unmet financial advice needs of Australians. Without delving into the detail of financial advisers’ express challenges (of which I am very empathetic, as there are many!) and ASIC’s role (which is fairly well known) what took my interest is: 1) the focus ASIC intends to take in this area from a proactive standpoint i.e. not just enforcement; and 2) some of the areas it will be looking to improve in. For example, Mr Longo said: “We’re looking at creating a Financial Adviser Hub on our website so the relevant content is easier for you to find. We’re also looking at adding extra guidance in the form of an example Statement of Advice, and an Information Sheet about Records of Advice.” It is a positive change of tone for a critical Australian industry that has been badly scarred in recent years.
- Policy agenda (APRA): the prudential regulator has released a letter providing an updated schedule of policy priorities for the remainder of 2021. It has said that its decision to reprioritise its annual policy agenda, released back in February 2021, intends to enable APRA-regulated entities to focus on implementing key policy reforms, as well as managing the impacts of COVID-19. The finalisation of climate risk and operational resilience guides are probably the biggest ones which I espied.
- Insurance in super (APRA): APRA is updating SPS 250 Insurance in Superannuation (SPS 250) and draft Prudential Practice Guide SPG 250 Insurance in Superannuation (SPG 250) to respond to concerns raised in the Hayne Royal Commission concern super fund meeting their obligations to prudently select, monitor and manage insurers. It intends to issue the final standard and guidance in the coming months, with the revised SPS 250 will be effective from 1 July 2022. For now, it has set out its expectations in a letter to the industry. There are three key elements: 1) in addition to maintaining the requirement for independent certification for related party insurance arrangements, APRA intends to include a provision in SPS 250 for APRA to require an RSE licensee to obtain an independent certification; 2) APRA intends to require that RSE licensees’ insurance management frameworks include consideration of any contractual terms and business practices that may indicate conflicts and/or ‘priority and privilege’; and 3)APRA intends to require RSE licensees to consider whether any ‘priority and privilege’ provisions in insurance arrangements are affecting the insurance outcomes for members. You can read the full letter here.
- Privacy: Australian information access commissioners and ombudsmen have published an authoritative statement to promote the proactive release of information. They have been designed to target government agencies to encourage and authorise the proactive release of information and promote open government, citing ‘inconsistent levels of access to valuable and important information from government. This is particularly evident in the differences in proactive release of information between jurisdictions’. Some of the key principles include ‘information held by government and public institutions is a public resource’ and ‘a culture of transparency within government is everyone’s responsibility’. My top read for the week – and an initiative I thoroughly agree with — you can read the statement here.
Thought for the week: APRA and ASIC are very consistent with their media releases. AUSTRAC’s last media release was on 17 August 2021. I understand it is a smaller regulator, with less resources, but given the high focus on AML/CTF at the moment and the complexity of the regulatory system it oversees, my sense is that we should expect a little more engagement!