Australian regulators weekly wrap — Monday, 20 March 2023

  1. New general insurer (APRA): APRA has granted PetSure (Australia) Pty Ltd a licence to operate as a general insurer under the Insurance Act 1973, and has also licensed PetSure Holdings Pty Ltd as a NOHC under that legislation. Obtaining a new or substantially modified AFSL is always a great day in our practice, however, a new prudential entity coming onto the market is very exciting given the rarity! Especially a GI. You can read more on APRA’s licensing process here.
  2. Capital requirements (USA): the failure of three regional banks (including Silicon Valley Bank), and major wobble of Credit Suisse, is being felt around the world. It’s hard to predict the fallout — certainly vanilla debt for technology companies may get harder — but perhaps not hard to see where the cause lies. Trump relaxed Dodd Frank in 2018 to say that only banks with over $250 billion in assets were to be subject to enhanced capital requirements including stress tests, stricter capital requirements and risk management practices. This was up from the Dodd-Frank Act’s $50 billion threshold. That loophole is now sought to be reversed by Sen. Warren in the USA this week. Too hard to call though, with a Republican lower house.
  3. Enforceable undertaking (AUSTRAC): AUSTRAC has accepted an Enforceable Undertaking from PayPal Australia Pty Ltd to ensure its compliance with Australia’s anti-money laundering and counter-terrorism financing laws. PayPal’s systems, controls and governance in relation to its international funds transfer instructions were subject to previous criticism by AUSTRAC. The regulator noted that PayPal has already undertaken significant work, including an independent audit, to strengthen its program and has committed to provide AUSTRAC with independent assurance of the suitability and sustainability of this work — actions which implicitly supported the granting of an EU. A sensible approach in my book. Not every problem requires a regulatory hammer…
  4. Life insurance products (ASIC): ASIC has provided conditional relief for life insurers from the DDO obligations when reissuing life insurance policies in certain circumstances. Set out in ASIC Corporations (Design and Distribution Obligations — Reissued Life Policies Class Exemption) Instrument 2023/183, it will reduce the regulatory burden for life insurers so they can reissue pre-DDO policies i.e. pre 5 October 2021 in circumstances that have a low risk for consumer harm.

Thought for the future: not all of the Corporations Act, and NCCP Act fits together perfectly. Where it does not, that is okay! There is always the ability to ask for a ‘no action’ letter or other appropriate form of relief from ASIC. They’re really good in considering / responding as well.

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