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.
- Immunity policy (ASIC): power and information. ASIC has received plenty of the former in the past 2 years, and now it is focusing on the latter. It hasreleased a policywhich sets out information on applications for immunity from civil penalty or criminal proceedings for a contravention of a provision in Part 7.10 of theCorporations Act 2001(Cth). The main offences within this Part are market manipulation and insider trading. In essence, the policy is for individuals who: a) think they may have contravened, with at least one other person, a provision in Part 7.10 of theCorporations Act 2001(Cth); b) wish to apply for immunity from civil penalty or criminal proceedings; and c) intend to cooperate with ASIC in relation to its investigation and any court proceedings regarding the contravention. The policy comes with an FAQs sectionhere, complete with the exhortation that it will only be first in, best dressed that gets the immunity. You can read more on the policy in my colleagues excellent summaryhere. While I understand the intent of the policy, and suspect that ASIC has been spending more time with our American cousins, the area does have the potential to raise a host of legal and ethical issues.
- Crown Casino (Victoria):the Victorians have announced a Royal Commission into Crown Melbourne Ltds suitability to hold its Victorian casino licence, as well as the suitability of its associates, including Crown Resorts Ltd. It comes on the heels of the findings of the New South Wales Independent Liquor and Gaming Authority (ILGA) inquiry, which held that casino was not a suitable licensee holder and its NSW state gaming clearance should be revoked. Commissioner Patricia Bergin said in her findings there wassignificant deficiencyin Crowns corporate character and a lack of understanding and compliance of the countrys anti-money laundering and counter-terrorism financing laws. She stated thatany applicant for a casino licence with the attributes of Crowns stark realities of facilitating money laundering, exposing staff to the risk of detention in a foreign jurisdiction and pursuing commercial relationships with individuals with connections to triads and organised crime groups would not be confident of a positive outcome. Raymond Finkelstein QC will serve as Commissioner and Chairperson of the Royal Commission and will hand down his recommendations by 1 August 2021; to me, it will be quite interesting if he focuses on the corporate culture aspects of Crown (the global regulatory focus du jour) quite as much as Commissioner Bergin did.
- Financial advisers (Parliament):theFinancial Sector Reform (Hayne Royal Commission Response ?2) Bill 2020has passed both houses and is awaiting assent. It amends theCorporations Act 2001to require financial services providers that receive fees under an ongoing fee arrangement to: provide clients with a document each year which outlines the fees they will be charged and the services they will be entitled to in the following 12 months and which seeks annual renewal commitment; and, require a financial services licensee or authorised representative to give a written disclosure of lack of independence where they are authorised to provide personal advice to a retail client. It also amends theSuperannuation Industry (Supervision) Act 1993to provide that a superannuation trustee can only charge advice fees to a member where certain conditions are satisfied, and remove a superannuation trustees ability to charge fees under an ongoing fee arrangement for financial product advice from MySuper products.
- ASIC v. NAB (Court): ASIC hascommenced proceedingsagainst NAB for unconscionable conduct and misrepresentation of account fees in charging customers a total of $365,454 to which it wasnt entitled between 25 February 2015 and 22 February 2019. The regulator alleges misleading or deceptive conduct and that NAB failed to provide financial services efficiently, honestly and fairly(no surprises that s. 912A of theCorporations Act 2001(Cth) is being used. Now that it is a civil penalty, it features in most of ASICs actions). ASIC also stated that NAB had identified that it was charging periodic payment fees in error to both personal and business banking customers by the end of October 2016, however, it took NAB until July 2018 to lodge a breach report with ASIC. NAB has acknowledged these issue publicly; it is bit strange therefore that ASIC felt the need to file proceedings, but does fit in with the whole why not litigate mantra. In any event, it does highlight a point that is a growing issue that ASIC is focusing on breach reporting. Please do get in touch in you want to see an early iteration of am inexpensive Regtech solution we have created to handle breach reporting!
- Enforcement priorities (ACCC): Australias competition regulator has announced a raft ofstrategic priorities for 2021. Of most interest to me, was the fact that the ACCC will be focusing on investigations into anti-competitive conduct in the finance sector, including following through on recommendations made in theHome Loan Inquiry final report(which focused on impediments to borrowers switching to alternative lenders, and identifying cost effective recommendations to address specific impediments), and digital platforms with the ACCC working closely with overseas counterparts and considering possible enforcement issues. These priority areas supplement the ACCCs enduring priorities, which include cartel conduct, anti-competitive conduct, product safety, consumer experiencing vulnerability and conduct impacting ATSI individuals.
Thought for the future:Australians have a particular cultural aversion to dobbing, though that seems to be the basis of a good number of regulatory reforms in our pipeline Aside from whistleblowing, take the mortgage brokers information sharing reforms coming into play in October 2021 which requires licensees to conform to a referencing checking and information-sharing protocols which are designed to weed out the bad apples or suffer the imposition of a civil penalty for non-compliance. You can read more inthis article. It would be a fascinating piece of research to see how Australia, as opposed to say the US or UK, compares globally in respect of these areas