- Binance (ASIC): ASIC has cancelled the AFSL of Binance Australia Derivatives. ASIC has been conducting a review of Binance’s financial services business in Australia, including its classification of retail and wholesale clients. On 29 March 2023, ASIC issued a notice of hearing under s915C of the Corporations Act 2001 to consider whether ASIC should cancel or suspend the AFS licence. Binance then voluntarily gave up its licence. I personally don’t feel great about this one. The combination of FTX’s failure (and ASIC’s ensuing public excoriation), heat Binance is getting globally e.g. from the CFTC, ASIC’s general heavy focus on crypto and relative egregiousness of the contact — MANY businesses get retail and wholesale clients mixed up despite their best efforts — has me uncomfortable. The major ASIC media announcement, which I can never recall before for a straight voluntary licence cancellation, adds to that discomfort. Consumer protection is critical, and as a country we need to calibrate the response to businesses seeking to give consumers access to quality regulated products. The demand will still remain, so if those businesses don’t exist then consumers may go elsewhere, and potentially to less safe businesses.
- Auto & General (ASIC): ASIC has commenced the first proceedings alleging unfair contract terms in an insurance contract against Auto & General. ASIC alleges that since 5 April 2021, a contract term requiring customers to notify A&G ‘if anything changes about your home or contents’ is unfair. That is because, among other things, ASIC alleges that the term is practically unable to be met, it imposes an unclear obligation, and suggests that Auto & General has a broader right to refuse claims or reduce the amount payable under claims if the customer does not meet the notification obligation. ASIC has also said that the term could be misleading and deceptive. ASIC is seeking declarations that the term is void, and will also seek injunctions and corrective orders. My sense is that its action is interpretationally a really difficult one, and also ignores the effect of s. 13 of the ICA. That section provides “A contract of insurance is a contract based on the utmost good faith and there is implied in such a contract a provision requiring each party to it to act towards the other party, in respect of any matter arising under or in relation to it, with the utmost good faith.”
- Whistleblowers (ASIC): ASIC has released the helpful (if terribly named, even by my bad pun standards) report ‘whistle while you work’. The report exhorts board directors to: 1) carefully consider the outcomes they want from their firm’s whistleblower program; and 2) ensure the program operates in such a way that those outcomes are achieved. From a targeted review of various companies’ whistleblower programs, ASIC has identified that the more effective practices include: firms considering how they can actively promote whistleblowing; firms considering the objectives of their whistleblower policy and program, and identifying indicators and metrics to monitor the program’s effectiveness; boards receiving regular information from executives about how their program is designed and resourced, and how it is operating; and, boards receiving regular training or briefings on the firm’s whistleblowing regime, whistleblowing arrangements, and directors’ duties. With ASIC’s action against Terracom for alleged breaches of whistleblower protection laws on foot, there is well and truly a focus on the risk infrastructure around whistleblowing now.
- REST Program (AUSTRAC): the AML/CTF regulators’ REST program is designed to transform AUSTRAC Online to improve security, increase system capacity and provide a modern user centric platform. It is supposed to allow for engagement with AUSTRAC’s reporting entities in a more efficient way. AUSTRAC has just come out with a number of Q&A on the REST program, and sought feedback. Happily, there will be API connectivity! Also, the new reporting forms will come out in early 2024.
- Finfluencers (FCA): I made mild fun of ASIC’s ‘whistle why you work’ report, though I think all regulator education is great and necessary — especially education which cuts through to the intended audience. Humor and relatability is all part of that. So the UK FCA and ASA teaming up with reality TV person (Sharon Gaffka) to help educate fin-fluencers about the risks involved in promoting financial products is great in my view. I don’t care that it is unorthodox, just as Gary Gensler’s slightly silly video on crypto staking (with lots of bad puns about steak) serves a purpose. The fact that the FCA is inviting influencer agents and the Influencer Marketing Trade Body (apparently there is such a thing) to an open roundtable discussion on illegal financial promotions is similarly wonderful. I hope that ASIC’s follows suit!
Thought for the future: ASIC is taking on increasingly riskier and novel cases for it. In part, that is a response to the Royal Commission, and I don’t see that changing while the Senate inquiry hangs over its head until 2024..