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Latest Banking & Finance Law Updates in Australia for 2024
Expertly authored practice-area news, key cases and legislative reforms. Register or log in below to access the full legal updates.
Copyright © 2024 LexisNexis
Federal Court finds DG Institute made false or misleading representations, sole director knowingly concerned in contraventions (Australian Competition and Consumer Commission v Master Wealth Control Pty Ltd)
Date: 10 April 2024
Court: Federal Court of Australia
Judge(s): Jackman J
Judgment date: 9 April 2024
Catchwords: Consumer law – misleading and deceptive conduct – accessorial liability
Abstract:
The Federal Court has found Master Wealth Control Pty Ltd (Master Wealth Control), trading as DG Institute, made false or misleading representations in the promotion and sale of two education programs for control of wealth. Its director, Ms Dominique Grubisa, was also found liable for aiding, abetting and procuring contraventions and being knowingly concerned in and party to the contraventions.
Background
DG Institute offered two education programs relating to property and business investment to consumers called Real Estate Rescue (RER) and Master Wealth Control (MWC) from April 2017 to November 2022. Both programs were promoted through free in-person and online seminars and in videos featuring Ms Grubisa on its website.
During this period, at least 1,900 and 1,800 students were enrolled in the RER and MWC programs respectively and each paid between $4,500 to $9,200 to participate. DG Institute earned a total of over $18 million in revenue from both programs.
Corporate Finance Update – Issue 16
Date: 9 April 2024
Source: Australian Securities & Investments Commission (ASIC)
Abstract:
The recent Corporate Finance Update Issue 16 delves into a range of topics within the corporate finance sector, focusing on cybersecurity, environmental compliance, greenwashing, and significant regulatory updates.
Cybersecurity Insights: The update emphasises the partnership between the regulatory body and the Council of Financial Regulators (CFR) in conducting Cyber and Operational Resilience Intelligence-led Exercises (CORIE) with major financial organisations. These exercises aim to fortify cyber resilience by simulating realistic cyber attacks to identify and address vulnerabilities, particularly in password management and access controls. Findings reveal critical security gaps, underscoring the need for enhanced cybersecurity measures, including robust password protocols and multifactor authentication, to protect against evolving cyber threats and safeguard sensitive data within the financial services sector.
Environmental Compliance and Greenwashing: The issue sheds light on the enforcement actions taken against greenwashing. ASIC's issuance of infringement notices to entities such as Morningstar and Northern Trust highlights the regulatory focus on ensuring that companies' environmental claims are truthful and substantiated. The update details the specific allegations against these firms, pointing out the discrepancies in their environmental claims and the actual investments or practices they engaged in.
Federal Court finds Vanguard engaged in greenwashing by misrepresenting ESG credentials of investment fund (Australian Securities and Investments Commission v Vanguard Investments Australia Ltd [2024] FCA 308)
Date: 3 April 2024
Court: Federal Court of Australia
Judge(s): O’BRYAN J
Judgment date: 28 MARCH 2024
Catchwords: CONSUMER LAW – ss 12DB and 12DF ASIC Act – greenwashing – ESG representations
Abstract:
In proceedings brought by the Australian Securities and Investments Commission (ASIC), the Federal Court has found Vanguard Investments Australia Ltd (Vanguard) liable for breaching the consumer protection provisions in ss 12DB and 12DF of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) by making false or misleading representations about the ESG screening criteria for its Ethically Conscious Global Aggregate Bond Index Fund (the Fund). A hearing as to penalties will occur at a later date.
The case:
ASIC alleged that in Product Disclosure Statements (PDS), media releases, website content, a Youtube video interview and at a promotional event presentation later published online, Vanguard had made representations that the Fund offered an ethically conscious investment opportunity by seeking to track the Bloomberg Barclays MSCI Global Aggregate SRI Exclusions Float Adjusted Index (Index)) and that before being included in the Index (and thus, the Fund), securities were researched and screened against ESG criteria and those that breached the criteria were excluded or removed.
Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 introduced
Date: 3 April 2024
Source: Parliament of the Commonwealth of Australia
Abstract:
On 27 March 2024, landmark climate reporting legislation was introduced into the House of Representatives as Schedule 4 of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Bill).
The Bill was introduced following consultation on an exposure draft of the Bill and, if enacted, would introduce a new mandatory climate disclosure reporting regime in Australia which is aligned with international standards.
The Senate has referred the provisions of the Bill 2024 to the Senate Economics Legislation Committee for inquiry and report by 30 April 2024.
Mandatory climate-related reporting regime
The specific details of the new mandatory climate disclosure requirements will be set out in new accounting standards which are currently being developed by the Australian Accounting Standards Board (AASB) and based on the International Sustainability Standards Board (ISSB) standards: IFRS S1 and IFRS S2.
There are a few key differences in the Bill compared with the exposure draft. For example, the reporting requirements which apply to Group 1 entities.
New legislation to increase the accessibility and affordability of financial advice
Date: 28 March 2024
Source: Treasury
Summary originally published by Capital Monitor
The Government has introduced the first tranche of legislation to deliver its comprehensive package of reforms to ensure Australians have access to quality and affordable financial advice, said Assistant Treasurer Stephen Jones. There are over five million Australians at or approaching retirement who need assistance to navigate the pension and superannuation systems. Unfortunately, the average cost of financial advice puts professional advice out of reach for many Australians. The Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 implements reforms which reduce unnecessary red tape that adds to the time and cost of preparing financial advice.
ACT: Pre-lodgement check service, new requisition fees and mortgages on Form 026-M accepted until 31 December 2024
Date: 27 March 2024
Source: ACT Land Titles Office
The Australian Capital Territory’s (ACT) Land Titles Office has announced:
- a new pre-lodgement check service;
- the introduction of requisition fees; and
- an extension to the date mortgages on Form 026-M will be accepted.
Pre-lodgement check
Applications can be submitted to the Land Titles Office prior to lodgement for a review which is aimed to:
- check if the application is correct and ready to lodge;
- advice what changes (if any) and application may need before lodgement; and
- avoid extra costs or registration delays.
Fees of $80 for each simple application, $160 for each complex application, and $309 for a unit plan or sublease plan plus $10 per unit over 30 units apply.
A list of simple and complex applications, as well as links to make a pre-lodgement submission, are available on the Land Titles Office’s website.
Requisition fees
For applications lodged from 11 June 2024, requisitions fees may apply if the Land Titles Office has to:
- follow up on errors in an application; or
- check an application again.
South Australian Supreme Court rules s 269 of the PPS Act does not operate to set off
Date: 26 March 2024
Court: Supreme Court of South Australia
Judge: Stein J
Catchwords: PPS Act, deemed security interest, vesting in insolvency, remedies, set off
Abstract:
The Supreme Court of South Australia (Stein J) has ruled that it is open to the court to make orders for delivery up of goods vested in a grantor by reason of s 267 of the Personal Property Securities Act 2009 (Cth) (PPS Act) and s 269 of the PPS Act does not operate to set off.
Background
This decision relates to orders to give effect to the judgment in DeBourbel Pty Ltd (in liq)(DeBourbel) v Distilleria Pty Ltd (Distilleria) [2023]SASC 88, BC202306176. That judgment decided that certain assets used by DeBourbel at a whisky distillery were the subject of a PPS lease within the meaning of s 13 of the PPS Act and accordingly a deemed security interest. Because Distilleria had failed to perfect its’ security interest the relevant assets vested in DeBourbel immediately before its liquidation by reason of s 267 of the PPS Act.
ASIC commences first proceedings against director for failing to obtain DIN
Date: 25 March 2024
Source: Australian Securities and Investments Commission
The Australian Securities and Investments Commission (ASIC) has commenced proceedings against a director for failing to obtain a director identification number (DIN).
The DIN regime, administered by the Australian Business Registry Services and enforced by ASIC came into effect on 1 November 2021 and existing company directors had until 30 November 2022 to apply for a DIN.
Failure to have a DIN is both a civil contravention and a criminal offence (s1272C(1) Corporations Act 2001 Cth) This is the first time proceedings have been brought against a director for contravening section 1272C(1). The defendant faces a maximum penalty of $13,320.
Read ASIC’s media release here.
Federal Court dismisses ASIC claim in relation to alleged unfair contract terms in insurance contracts (Australian Securities and Investments Commission v Auto & General Insurance Company Limited)
Date: 25 March 2024
Court: Federal Court of Australia
Judge: Jackman J
Judgment date: 22 March 2024
Catchwords: INSURANCE — Unfair contract terms regime — Where term of product disclosure statement required insured to “tell us if anything changes while you’re insured with us” — Whether term unfair — How lack of transparency should be taken into account under unfair contract terms regime.
Abstract:
The Federal Court (Jackman J) has dismissed the Australian Securities and Investments Commission’s (ASIC’s) claim that certain terms in insurance contracts issued by Auto & General Insurance Company Limited (A&G) were unfair under the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).
Background
A&G issued approximately 1.4 million home and contents insurance contracts between April 2021 and May 2023 under numerous brands such as Budget Direct, ING and Virgin Insurance.
Each contract contained terms requiring the insured to notify the insurer of certain events during the insurance period.
Version 7 of ARNECC Client Authorisation Form published
Date: 20 March 2024
Source: Australian Registrars’ National Electronic Conveyancing Council
Abstract:
Version 7 of the Client Authorisation Form has been published by the Australian Registrars’ National Conveyancing Council (ARNECC) and will apply from 28 March 2024.
See our earlier update on 2 February 2024 on version 7 of ARNECC Model Operating Requirements and Model Participation Rules.
A Client Authorisation signed by a client is needed in many conveyancing transactions permitting legal practitioners and conveyancers (subscribers) representing a client to execute documents such as a land registry instrument, electronically lodge documents with the land registry, and authorize or complete any financial aspects of the transaction on the client’s behalf.
A Client Authorisation is required to be in the prescribed form and completed correctly to operate. Subscribers must retain the Client Authorisation together with any supporting evidence for a period of at least 7 years from the date of lodgment of the relevant electronic land registry document.
A Client Authorisation can be located here
For more information about the Client Authorisation see the ARNECC website.
Financial Accountability Regime commences today (15 March 2024)
Date: 15 March 2024
Source: Australian Prudential Regulation Authority (APRA)
Abstract:
The Financial Accountability Regime (FAR) has commenced for the banking industry. As noted in our previous update, on 8 March 2024 the regulators, APRA and ASIC, released final rules and further guidance to support the financial services industry in implementing the FAR regime.
The regulator’s information package released on 8 March 2024 (and updated on 14 March 2024) includes:
- the Regulator rules, which prescribe information for inclusion in the FAR register of accountable persons;
- the Transitional rules, which prescribe information to be provided by authorised deposit-taking institutions (ADIs) in relation to their existing accountable persons under the BEAR at the transition point to the FAR;
- an Information paper for ADIs, including the information ADIs and their authorised NOHCs must provide to APRA and ASIC;
- an Information paper for accountability entities, including an overview on how the regulators will jointly administer the FAR and how the regulators will use their regulatory and enforcement powers;
- Accountability statement guidance and template; and
- reporting form instruction guides to assist banking entities in providing the required information to APRA and ASIC.
Draft Buy Now Pay Later legislation released for consultation
Date: 13 March 2024
Source: Treasury.gov.au
On 12 March 2024 the Australian Government released for consultation the Treasury Laws Amendment Bill 2024 (Cth) (Amending bill). The Amending bill, if passed will regulate Buy Now, Pay Later (BNPL) products within Australia.
The Amending bill amends the National Consumer Protection Act 2009 (Cth), extending its application to BNPL products and bringing them into the existing regulatory framework for other credit products. The proposed legislation will require providers of BNPL products to hold an Australian Credit Licence and take steps to ensure that they are lending responsibly and meeting industry standards concerning product disclosure, dispute resolution and hardship assistance.
The draft bill is accompanied by an explanatory memorandum and draft regulations accompanied by an explanatory statement.
Submissions for interested parties will remain open until 9 April 2024 before the introduction of a final bill to Parliament later this year.
Summary originally published by Capital Monitor.
APRA & ASIC release final rules and further guidance for the Financial Accountability Regime
Date: 11 March 2024
Source: Australian Prudential Regulation Authority (APRA)
APRA and ASIC as joint administrators of the Financial Accountability Regime (FAR) have released final rules and further guidance to support the financial services industry in implementing the FAR.
The materials issued include the Regulator Rules, the Transitional Rules and the Key Functions Descriptions that were released for consultation on 20 July 2023, as well as reporting form instructions to assist banking entities in providing the required information to APRA and ASIC.
APRA and ASIC have also released a joint response to their consultation in July 2023.
For more, see the APRA media release here.
ASIC issues interim stop order to retailer for Centerpay deductions
Date: 4 March 2024
Court: Federal Court of Australia
Source: Australian Securities & Investments Commission (ASIC)
Abstract:
The Australian Securities and Investments Commission (ASIC) has issued an interim stop order under s 739 of the Corporations Act 2001 (Cth) (Corporations Act) to Coral Coast Distributors (Cairns) Pty Ltd (CCD), which operates Urban Rampage retail stores, to halt its practice of having customers enter into credit agreements for purchases through Centrepay deductions.
As these deductions constituted a credit facility, CCD was required to adhere to the design and distribution (DDO) regime, contained in Pt 7.8A of the Corporations Act by publishing a Target Market Determination (TMD) to identify the class of consumers for whom the product was suitable and taking steps to ensure it would be marketed to that class. ASIC considered that CCD's Target Market Determination (TMD) lacked detail, particularly regarding consumers' financial capacity assessment and that this resulted from CCD’s inability to ensure that this form of credit facility was suited to the needs of the consumers identified in the TMD.
E-conveyancing: Adoption of Version 7 of the Model Participation Rules and Model Operating Requirements
Date: 1 March 2024
Source: ARNECC
Following our earlier update on 2 February 2024, all jurisdictions (except the Northern Territory) have adopted Version 7 of the Model Participation Rules (Rules) and Model Operating Requirements (Requirements).
Commencement for each jurisdiction
Version 7 of the Rules and the Requirements commence in:
- New South Wales on 28 March 2024.
- Victoria on 28 March 2024.
- Queensland on 29 March 2024.
- South Australia on 28 March 2024.
- Western Australia on 28 March 2024.
- Tasmania on 8 March 2024.
- Australian Capital Territory on 28 March 2024.
Changes to the Rules and the Requirements
Our earlier update details the changes between Version 6 and Version 7 of the Rules and the Requirements.
Clean and marked-up versions of the Rules can be found here and the Requirements can be found here.
Adopted Rules and Requirements for each jurisdiction
The Rules for each jurisdiction can be found here.
The Requirements for each jurisdiction can be found here.
Treasury announces review of Australia’s credit reporting framework
Date: 1 March 2024
Source: The Australian Treasury
The Australian Government has announced an independent review of Australia’s Credit Reporting Framework.
The review will evaluate the effectiveness and efficiency of the credit reporting provisions in the Privacy Act 1988 (Cth) and the National Consumer Credit Protection Act 2009 (Cth) in enabling effective lending decisions by credit providers while ensuring the personal information of consumers is adequately protected.
The review is being conducted by former Australian Prudential Regulation Authority (APRA) senior executive Heidi Richards, with a report to be delivered by 1 October 2024.
For more information, see the terms of reference for the review here, and Treasury’s statement here.
SA: Further mandating of e-conveyancing from 8 April 2024
Date: 1 March 2024
Source: Office of the Registrar-General | Land Services SA
In South Australia, from 8 April 2024, there is a widened mandate for dealings which must be lodged via an ELNO.
The Registrar-General has notified lodging parties that the below list of additional dealings which be required to be lodged via an ELNO from 8 April 2024.
- Application to Register Death (Subsidiary Interest) (AD2)
- Death of Lessee Determining Lease (ADD)
- Agreement (AG)
- Heritage Agreement (AH)
- Retirement Village (AR)
- Bankruptcy (BA)
- Covenant (C)
- Change of Name (CN)
- Change of Name (Subsidiary Interest) (CN2)
- Order of Court (CO2) (note: the mandate only applies to CO2 dealings lodged in relation to section 8 of the Enforcement of Judgments Act 1991 (SA))
- Cancellation of Retirement Village (CR)
- Discharge Misc Advance/Charge/Order of Court (DA) (note: the mandate only applies to DA dealings lodged in relation to section 8 of the Enforcement of Judgments Act 1991 (SA))
- Discharge of Covenant (DC)
- Discharge of Encumbrance (DE) (note: the existing e-conveyancing mandate is extended to include “by virtue of death of annuitant”)
- Extension of Lease (EL)
- Extension of Mortgage (EM)
- Extension of Underlease (EU)
ANZ/Suncorp acquisition to proceed as Tribunal overturns ACCC decision
Date: 20 February 2024
Source: Australian Competition & Consumer Commission
The Australian Competition Tribunal (Tribunal) has set aside the Australian Competition & Consumer Commission’s (ACCC) decision to deny authorisation of ANZ's proposed acquisition of Suncorp's banking business.
The Tribunal is the review body for decisions made by the ACCC and applies the same authorisation test as the ACCC, granting authorisation if either: 1) the conduct would not have the effect or be likely to have the effect of substantially lessening competition; or (2) the public benefit would outweigh the detriment.
The acquisition will now proceed to Treasurer Jim Chalmers for final approval and also requires modifications to existing legislation through the Queensland parliament
The ACCC’s decision
The ACCC denied authorisation for the acquisition in 2023, stating that it was not satisfied that the proposed acquisition was not likely to substantially lessen competition in the critical banking markets impacted by the acquisition (see our previous Latest Legal Update ACCC denies ANZ acquisition of Suncorp Bank). One of the ACCC’s key arguments was that the deal would make it more likely that the major banks would coordinate in the future.
Federal Court finds crypto fintech engaged in unlicensed financial services (Australian Securities and Investments Commission v Web3 Ventures Pty Ltd)
Date: 16 February 2024
Court: Federal Court of Australia
Judge(s): Jackman J
Judgment date: 9 February 2024
Catchwords: Corporations – operation of unregistered management investment scheme in contravention of s 601ED(5) of the Corporations Act 2001 (Cth) – carrying on financial services business without an Australian Financial Services Licence in contravention of s 911A of the Corporations Act – investment in cryptocurrency
Abstract:
In Australian Securities and Investments Commission (ASIC) v Web3 Ventures Pty Ltd [2024] FCA 64, the Federal Court of Australia held that fintech company Block Earner had engaged in unlicensed financial services conduct in contravention of ss911A(1) and (5B) of the Corporations Act 2001 (Cth) (the Corporations Act) and operated an unregistered managed investment scheme contrary to ss 601ED(5) and (8) of the Corporations Act. The decision clarifies the application of financial services law to crypto products.
Background:
Block Earner operates an online platform through its website, offering various products. Between March to November 2022, Block Earner offered an ‘Earner’ which allowed consumers to earn fixed yield returns from different crypto-assets. From March 2022 onward it Block Earner has offered a second product, ‘Access’ offers consumers streamlined access to peer-to-peer finance.
Mortgage providing indirect benefit to directors held to be unreasonable director-related transaction (Cooper as liquidator of Runtong Investment and Development Pty Ltd (in liq) v CEG Direct Securities Pty Ltd)
Date: 14 February 2024
Court: Federal Court of Australia
Judge(s): O’Sullivan J
Judgment date: 12 January 2024
Catchwords: CORPORATIONS LAW — Where now insolvent plaintiff company executed a mortgage over land in favour of the defendant to secure borrowings from the defendant by two other companies — Where all three companies share two common directors — Where each of the three companies also had other directors — Where the two common directors had given personal guarantees guaranteeing the repayment of borrowings by the other two companies — Whether by the grant of the mortgage the two common directors obtained a benefit by reducing their contingent liability under the terms of the personal guarantees — Whether the transaction was an unreasonable director-related transaction within the meaning of s 588FDA of the Corporations Act 2001 (Cth).
Abstract:
In Cooper as liquidator of Runtong Investment and Development Pty Ltd (in liq) v CEG Direct Securities Pty Ltd, the Federal Court held that a mortgage granted by Runtong Investment and Development Pty Ltd (Runtong) to CEG Direct Securities Pty Ltd (CEG) was an unreasonable director-related transaction under s 588FDA of the Corporations Act 2001 (Cth). Runtong had granted a mortgage to CEG as security for loans to related entities, which indirectly benefited Runtong's directors by reducing their liability under personal guarantees but resulted in no corresponding benefit to Runtong.
Federal Court imposes penalty for improper PPS registrations (Registrar of Personal Property Securities v Brookfield)
Date: 13 February 2024
Court: Federal Court of Australia
Judge(s): Sarah C Derrington J
Judgment date: 30 January 2024
Catchwords: CORPORATIONS – Securities – registration of purported security interest under Personal Property Securities Act 2009 (Cth) – whether applicant applied to register financing statements – whether applicant was a secured party – whether belief on reasonable grounds applicant was or would become secured party in relation to collateral – whether debt under sale and purchase agreement created security interest in favour of applicant – imposition of pecuniary penalty.
Abstract:
In the recent case of Registrar of Personal Property Securities v Brookfield [2024] FCA 29, the Federal Court of Australia addressed the issue of false registrations on the Personal Property Securities Register (PPSR).
Mr Ian Brookfield was found to have contravened ss 151(1) and 151(2) of the Personal Property Securities Act 2009 (Cth) (PPSA) in registering two financing statements without believing on reasonable grounds that he was, or would become, a secured party in relation to the collateral in question, and in failing to apply to amend their effect within five business days after the respective days on which those registrations were made.
Westpac ordered to pay $1.8 million penalty for unconscionable pre-hedging in interest rate swap deal
Date: 12 February 2024
Court: Federal Court of Australia
Judge(s): Lee J
Judgment date: 31 January 2024
Catchwords: Corporations – unconscionable conduct – insider trading – pre-hedging – Corporations – breach of financial services licensee obligations – services not provided efficiently, honestly and fairly
Abstract:
The Federal Court has ordered Westpac Banking Corporation (Westpac) to pay penalties of $1.8 million for unconscionable conduct in an $12 billion interest rate swap deal and $8 million towards for the Australian Securities and Investments Commission’s (ASIC) costs.
Background:
On 20 October 2016, Westpac executed the largest interest rate swap in Australian financial market history (Swap Deal) to allow a consortium of investors from the IFM group and AustralianSuper to acquire a 50.4% interest in Ausgrid. Westpac had previously quoted the consortium an execution margin on the basis that it would not receive notice of the Swap Deal to prevent on-market pre-hedging.
Despite awareness of its clients’ concerns regarding potential pre-hedging, Westpac made internal plans to pre-hedge up to 50% of the interest rate and failed to disclose these plans to the consortium. It actioned the pre-hedging prior to the Swap Deal, making approximately $20.7 million in trading profit.
Financial Accountability Regime commencement update
Date: 7 February 2024
Source: Australian Prudential Regulation Authority (APRA)
Abstract:
In a letter dated 5 February 2024 to all authorised deposit-taking institutions and their non-operating holding companies, APRA and ASIC announced the commencement of the Financial Accountability Regime (FAR) for the banking industry on March 15, 2024. The letter acknowledges the ongoing finalization of Minister Rules and grants the industry additional time to meet new FAR requirements, including registering new accountable persons and complying with notification obligations. Entities are encouraged to submit their applications and notifications as soon as possible, ideally by June 30, 2024. Further guidance on Regulator and Transitional Rules, as well as reporting form instructions, will be provided after the Minister Rules are released.
For more, see the APRA media release here.
Court declares Westpac engaged in unconscionable conduct for interest rate swap, maximum penalty applied
Date: 5 February 2024
Source: Australian Securities and Investments Commission (ASIC)
Abstract:
The Federal Court has declared Westpac Banking Corporation (Westpac) engaged in unconscionable conduct in October 2016 when executing a $12 billion interest rate swap transaction, the largest of its kind in Australian financial market history. Westpac will pay the maximum penalty of $1.8 million in relation to the conduct, together with $8 million for ASIC's litigation and investigation costs. Westpac's unconscionable conduct arose when it engaged in pre-hedging ahead of an interest rate swap transaction with a Consortium comprising AustralianSuper and IFM entities.
Summary originally published by Capital Monitor.
APRA 2024 supervision and policy priorities
Date: 31 January 2024
Source: Australian Prudential Regulation Authority (APRA)
Abstract:
The Australian Prudential Regulation Authority (APRA) has published an interim update on its supervision and policy priorities for the first half of the 2024 year.
Key priorities for the next six months include:
Operational and Cyber Resilience: APRA emphasises the importance of resilience against cyber threats and operational risks, given the increasing reliance on digital technologies. This includes maintaining standards under Prudential Standard CPS 234 (Information Security) and preparing for the upcoming Prudential Standard CPS 230 (Operational Risk Management).
Climate Risk Management: APRA is focused on ensuring entities are prepared to handle financial risks associated with climate change. This includes reviewing Prudential Practice Guide CPG 229 and conducting a Climate Risk Self-Assessment survey.
Financial Accountability Regime (FAR): Set to commence in 2024 for banks and in 2025 for the insurance and superannuation industries, FAR aims to strengthen accountability across regulated entities.
Governance, Culture, Remuneration, and Accountability (GCRA): A broad review of governance requirements is planned, with heightened focus in supervisory engagements.
Recovery and Resolution: APRA emphasises the importance of preparedness for adverse financial scenarios, following the international banking turmoil in early 2023.
Sector-specific priorities include:
Banking Initiatives: These involve managing interest rate risk, regulatory capital adequacy, liquidity, payments system modernisation, and the prudential treatment of crypto-assets.
Insurance Initiatives: APRA will focus on general insurance affordability, life insurance sustainability, and private health insurance capital reforms.
Superannuation Initiatives: This includes enhancing investment governance, improving transparency and accountability, and supporting better retirement incomes.
For more, see the complete Interim Policy and Supervision Priorities update here.
Climate-related financial disclosure - Exposure draft legislation
Date: 22 January 2024
Source: Treasury
Summary originally published by Capital Monitor.
This consultation follows the government's announcement of the final policy design for corporate climate-related financial disclosure requirements, as outlined in the Policy Statement. The Exposure Draft legislation seeks to amend parts of the Australian Securities and Investment Commission Act 2001 and the Corporations Act 2001 (Cth) to introduce mandatory requirements for large businesses and financial institutions to disclose their climate-related risks and opportunities. Treasury is seeking views on the Exposure Draft legislation and accompanying explanatory materials by 9 February 2024. Late submissions cannot be considered.
ALRC recommends confronting complexity in corporations and financial services legislation
Date: 19 January 2024
Source: Australian Law Reform Commission
Summary originally published by Capital Monitor.
The Australian Law Reform Commission (ALRC) Final Report, Confronting Complexity: Reforming Corporations and Financial Services Legislation (Report 141, 2023), was tabled in Parliament by the Attorney-General, the Hon Mark Dreyfus KC MP. The report found that the legislation governing Australia's financial services industry is a tangled mess - difficult to navigate, costly to comply with, and unnecessarily difficult to enforce. Judges have described the current laws as being like 'porridge', 'tortuous', 'treacherous', and 'labyrinthine'.
APLMA jointly publishes guide on introduction to green loan frameworks
Date: 8 January 2024
Source: Asia Pacific Loan Market Association (APLMA)
Abstract:
On 19 December 2023 the APLMA, Loan Market Association (LMA) and Loan Syndications and Trading Association (LTSA) jointly published “An introduction to green loan frameworks” (Guide), a guide providing direction on green loan frameworks as referenced in APLMA’s February 2023 update of the green loan principles.
APLMA states that the guide establishes the structure and purpose of a green loan framework, which is to evidence alignment with the four components of the GLP, as well as the overarching objectives and alignment of projects with taxonomies and eligibility criteria;
The guide also provides a checklist for borrowers aiming to create greater consistency between green loan frameworks and the broader sustainable lending market.
A copy of the Guide is available to APLMA members here.
For further guidance, see our guidance notes on Green finance.
Statutory Declarations Regulations 2023 (Cth) give effect to new Commonwealth statutory declaration regime from 1 January 2024
Date: 4 January 2024
Source: Federal Register of Legislation
Abstract:
Following the passing of the Statutory Declarations Amendment Act 2023 (Cth) (Amendment Act) allowing Commonwealth statutory declarations to be made and witnessed electronically from 1 January 2024 (including through certain online digital verification platforms), the Governor-General has made the Statutory Declarations Regulations 2023 (Cth) (Regulations).
The Regulations repeal and replace the Statutory Declarations Regulations 2018 (Cth) from 1 January 2024 and give effect to the amendments made to the Commonwealth statutory declaration regime by the Amendment Act, including by prescribing:
- who can witness Commonwealth statutory declarations; and
- the technical requirements for making Commonwealth statutory declarations under the new digital statutory declaration provisions.
Prescribed witnesses
The Regulations do not change who can witness a Commonwealth statutory declaration.
As with the previous regulations, the Regulations provide that a Commonwealth statutory declaration can be witnessed by any of the following “prescribed persons” in person or by video link:
- a person enrolled as a legal practitioner on the roll of a state or territory Supreme Court or the High Court of Australia;
- a person currently licensed or registered to practise law in Australia;
AUSTRAC releases regulatory priorities for 2024
Date: 14 December 2023
Source: Australian Transaction Reports and Analysis Centre (AUSTRAC)
On 14 December 2023 the Australian Transaction Reports and Analysis Centre (AUSTRAC) announced its’ regulatory priorities for 2024. In addition to AUSTRAC’s enduring priorities which include a focus on the high- risk sectors of banking, gambling and remittance AUSTRAC has indicated a key priority will be an increased scrutiny of the following sectors:
- Non-bank lenders and financiers
- Digital currency exchanges
- Payment platforms
- Bullion
Addressing serious and systemic deficiencies in compliance and risk management is also listed as a key priority and a focus for AUSTRAC’s enforcement work in 2024. AUSTRAC has noted the importance of board and executive accountability for maintaining a culture of compliance and risk management indicating that it may, in appropriate cases, join individuals in proceedings against reporting entities where an individual is in any way concerned in, or a party to a contravention of a civil penalty provision of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth).
Higher fees for foreign investment in housing
Date: 11 December 2023
Source: Treasury
The Treasurer has announced the following proposed changes to the fees payable on foreign investment applications and actions involving land and land entities:
- tripling the fees payable when a foreign person purchases an established residential dwelling;
- doubling vacancy fees for all foreign-owned dwellings purchased since 9 May 2017;
- strengthening the enforcement regime administered by the Australian Taxation Office;
- applying the commercial foreign investment fees for investment applications and actions for Build to Rent projects from 14 December 2023 onwards.
Legislation will be required to implement the changes and is expected early in 2024.
High Court finds class action waiver clause unfair, allows Ruby Princess appeal
Date: 6 December 2023
Court: High Court
Judge(s): Gageler CJ, Gordon, Edelman, Gleeson, Jagot JJ
Judgment date: 6 December 2023
Catchwords: CONSUMER PROTECTION - Extraterritorial application of s 23 of Australian Consumer Law - Whether s 5(1)(g) of Competition and Consumer Act 2010 (Cth) extended application of s 23 of ACL to contract- Whether class action waiver clause constituted unfair term under s 23 of ACL and void.
REPRESENTATIVE PROCEEDINGS - Whether class action waiver clause unenforceable as contrary to Pt IVA of Federal Court of Australia Act 1976 (Cth)
PRIVATE INTERNATIONAL LAW – Forum – Exclusive jurisdiction clause – Whether strong reasons not to grant stay of proceedings.
Abstract:
In Karpik v Carnival plc [2023] HCA 39 the High Court determined an interlocutory application arising out of representative proceedings brought on behalf of passengers of the Ruby Princess cruise ship against Carnival plc and Princess Cruise Lines Ltd (Princess) claiming losses caused by illness and deaths caused by the COVID-19 outbreak. The main proceedings were recently determined by the Federal Court in In Karpik v Carnival plc (The Ruby Princess) (Initial Trial) [2023] FCA 1280.
ACCC permits industry collaboration on access to cash
Date: 8 December 2023
Source: Australian Competition & Consumer Commission (ACCC)
The Australian Competition & Consumer Commission (ACCC) has granted interim authorisation to the Australian Banking Association (ABA), its member banks, and relevant industry participants to collaborate in facilitating sustainable access to cash.
The interim authorisation recognises that while cash usage has declined across Australia, it remains an important means of payment for some Australians. The application follows concerns from major supplier of cash-in-transit services, Armaguard, that the industry is at risk and potentially requiring sustainable intervention.
The authorisation relates to discussions and reaching in-principle agreements about an industry response to supporting access to cash. The ABA has advised they will seek separate authorisation before implementing any response arrived at through these discussions.
The ACCC granted the authorisation with reporting and transparency conditions, including the requirement that the ABA must report on their discussions to maintain access to cash in regional and remote areas.
The ACCC’s media release is available here and the interim authorisation can be found here.
Treasury releases proposed mandatory Scams Code Framework for consultation
Date: 4 December 2023
Source: Scams – mandatory industry codes | Treasury.gov.au
On 30 November 2023 the Australian Government released a consultation paper on a proposed Scams Code Framework. The paper is in response to the increasing threat of scams to consumers and businesses coupled with the absence of specific requirements on banks and other industry sectors to address scams.
The Framework proposes an overarching regime containing mandatory obligations for businesses in designated sectors to take action to address scams delivered over their services (possibly contained in the Competition and Consumer Act 2010 (Cth)). Sector specific legislation would then be established enabling regulators to develop sector specific codes.
The banking industry is a designated sector which would be subject to a sector specific code. The sector specific code is proposed to be applicable to all ADI’s, extending the scope of the regime to small and large banks, building societies and credit unions. Possible bank-specific obligations are proposed in the areas of prevention, detection and disruption and those owed to consumers. Some key obligations on banks include:
- implementing processes to enable confirmation of the identity of a payee to reduce payments to scam accounts;
A new centralised glossary for APRA’s prudential framework
Date: 28 November 2023
Source: Australian Securities and Investments Commission
Abstract:
On 27 November 2023, the Australian Prudential Regulation Authority (APRA) released for consultation a new cross-industry standard, CPS 001 Defined Terms. The purpose of the proposed new prudential standard is to centralise APRA’s existing standards on definitions for authorised deposit-taking institutions and general, life and private health insurers. The proposed new prudential standard does not introduce any new defined terms but simply aims to remove terms that are no longer in use, address duplication and consolidate existing definitions across different standards into one place.
A copy of the letter to industry and proposed new standard are available on the APRA website New cross- industry standard on definitions for ADIs and insurers.
Submissions close on 13 March 2024.
iExtend Enters into Court Enforceable Undertaking with ASIC
Date: 27 November 2023
Source: Australian Securities & Investments Commission (ASIC)
Abstract:
The Australian Securities & Investments Commission (ASIC) has accepted a court enforceable undertaking from iExtend Holdings Company Pty Ltd and iExi Pty Ltd (iExtend), following an investigation into their unlicensed financial services operations. iExtend was found to be offering to pay life insurance premiums for a share in any claims, acquiring interests in policies through co-ownership deeds. The undertaking mandates iExtend to obtain an Australian financial services (AFS) license for issuing financial products and providing related services. ASIC's action ensures that iExtend's practices align with industry standards, safeguarding customer interests.
For more, see the media release here.
iExtend Enters into Court Enforceable Undertaking with ASIC
Date: 27 November 2023
Source: Australian Securities & Investments Commission (ASIC)
Abstract:
The Australian Securities & Investments Commission (ASIC) has accepted a court enforceable undertaking from iExtend Holdings Company Pty Ltd and iExi Pty Ltd (iExtend), following an investigation into their unlicensed financial services operations. iExtend was found to be offering to pay life insurance premiums for a share in any claims, acquiring interests in policies through co-ownership deeds. The undertaking mandates iExtend to obtain an Australian financial services (AFS) license for issuing financial products and providing related services. ASIC's action ensures that iExtend's practices align with industry standards, safeguarding customer interests.
For more, see the media release here.
ASIC announces 2024 enforcement priorities
Date: 24 November 2023
Source: Australian Securities and Investments Commission
Summary originally published by Capital Monitor.
ASIC announced its enforcement priorities for 2024, indicating its enforcement focus for the coming year and communicating its intent to industry and stakeholders. In 2024, two new priorities have been added in relation to the superannuation industry, including a focus on member services failures and misconduct relating to the erosion of superannuation balances. New priorities relating to insurance claims handling, compliance with financial hardship obligations and the reportable situation regime have also been added. In addition, ASIC will be taking action against misconduct relating to used car financing to vulnerable consumers and gatekeepers such as auditors, registered liquidators and financial services and credit licensees who do not comply with their legal obligations.
ASIC consults on Banking Code of Practice
Date: 20 November 2023
Source: ASIC consults on ABA’s proposed changes to the banking code
On 17 November 2023 the Australian Securities and Investments Commission (ASIC) released Consultation Paper CP 373 (CP373). The paper invites feedback from interested parties on changes to the Australian Banking Association’s (ABA) Banking Code of Practice (Code). The proposed changes are in response to an independent review of the Code undertaken in 2021.
In particular ASIC is seeking stakeholder’s views on several key issues including:
- whether the proposed Code imposes obligations on subscribers that are beyond those required by the law and, in doing so, addresses key potential consumer harms;
- whether the proposed Code provides for effective administrative systems for monitoring compliance and whether the obligations are capable of being enforced;
- whether any Code review recommendations that the ABA has not supported should be included in the proposed Code; and
- whether the recommendations accepted by the ABA are appropriately reflected in the proposed Code
Click here to view CP373.
The consultation closes on 15 January 2024 with a decision on whether to approve the revised Code anticipated in the first half of 2024.
Electronic signing, remote witnessing and digital verification of Commonwealth statutory declarations from 1 January 2024
Date: 17 November 2023
Source: Parliament of Australia
The Statutory Declarations Amendment Act 2023 (Cth), allowing Commonwealth statutory declarations to be made and witnessed electronically, has received Royal Assent. The amendments will commence on 1 January 2024.
In addition to allowing for electronic signing and remote witnessing, the amendments introduce a new way of executing Commonwealth statutory declarations through a digital verification process conducted on a prescribed online platform.
Unfair Contract Terms reforms commence
Date: 10 November 2023
Source: Australian Securities and Investments Commission (ASIC)
Summary originally published by Capital Monitor.
From 9 November 2023, reforms will make UCTs illegal, attracting substantial penalties under the Competition and Consumer Act 2010 and the ASIC Act 2001, with each unfair term forming a separate contravention. The reforms also expand the class of small business that can rely on UCT protections. To meet the small business threshold from 9 November 2023, a business must either employ fewer than 100 people or have a turnover of less than $10 million for the previous income year. Under the ASIC Act, the UCT regime will only apply to a small business contract if the upfront price payable (excluding interest) for the contract is $5 million or less.
Statutory Declarations Amendment Bill passes both houses of Parliament
Date: 10 November 2023
Source: Parliament of Australia
The Statutory Declarations Amendment Bill 2023 (Cth), allowing Commonwealth statutory declarations to be made and witnessed electronically, has passed both houses of Parliament. The amendments will commence on the later of 1 January 2024 and the day after Royal Assent.
In addition to allowing for electronic signing and remote witnessing, the amendments introduce a new way of executing Commonwealth statutory declarations through a digital verification process conducted on a prescribed online platform.
Read the full text of the Bill and the explanatory memorandum on the Parliament of Australia website.
Retail clients compensated over $17.4 million following breaches of financial services laws by OTC derivative issuers
Date: 9 November 2023
Source: Australian Competition and Consumer Commission (ACCC)
Abstract:
The Australian Securities and Investments Commission (ASIC) has overseen over $17.4 million in combined compensation payments to more than 2,000 retail clients affected by breaches of financial services laws by eight retail over-the-counter (OTC) derivative issuers.
Since March 2021, approximately $4.3 million in compensation has been paid to over 1,500 retail clients of the following contracts for difference (CFD) issuers: Capital Com Australia Pty Ltd, CMC Markets Asia Pacific Pty Ltd, Eightcap Pty Ltd, IG Australia (IG Markets Limited and IG Australia Pty Ltd), Pepperstone Group Limited, Saxo Capital Markets (Australia) Limited, and StoneX Financial Pty Ltd trading as City Index.
The affected clients suffered losses on more than 150,000 CFD trades across 100 different CFD instruments which exceeded the leverage ratio limits prescribed by the ASIC Corporations (Product Intervention Order – Contracts for Difference) Instrument 2020/986. The CFD issuers self-reported the breaches, identifying the underlying causes to be change management weaknesses and manual errors, and undertook remediation programs. ASIC reviewed the compensation paid by the CFD issuers, prompting four issuers to agree to pay additional compensation of $2.8 million.
Treasury releases Australia’s Sustainable Finance Strategy for consultation
Date: 5 November 2023
Source: The Treasury
Abstract:
On 2 November 2023 the Federal Treasury released Australia’s Sustainable Finance Strategy for consultation. The Sustainable Finance Strategy supports Australia’s transition to net zero and affirms the Government’s commitment to driving sustainable finance and investment in Australia. The Sustainable Finance Strategy includes 12 policy priorities across three key pillars.
Pillar 1: improving transparency on climate and sustainability:
- Establishing a framework for sustainability-related financial disclosures.
- Developing a sustainable finance taxonomy, providing a common language and classification system for identifying and reporting on sustainable economic activities and investments.
- Supporting credible net zero transition planning.
- Developing a labelling system for investment products marketed as sustainable.
ASIC publishes insights on mandatory breach reporting regime
Date: 1 November 2023
Source: Australian Securities & Investments Commission (ASIC)
Abstract:
The Australian Securities and Investments Commission (ASIC) has released its second publication in response to information it has received from financial services and credit licensees concerning mandatory breach reporting obligations (reportable situations regime). The publication notes a lack of any material progress in several areas previously highlighted by ASIC, which include:
- - A low proportion of licensees reporting, suggesting potential non-compliance
- - Extended durations taken by licensees to identify, investigate, and remedy certain breaches
- - Ongoing challenges in pinpointing and documenting the underlying causes of breaches
ASIC Chair Joseph Longo stated that the reportable situations regime has been active for over two years and thus licensees should have adjusted their operations to ensure total compliance. He emphasised that ASIC, despite providing guidance, will now adopt a more stringent stance, including enforcement actions if necessary.
Further modernising business communications measures for corporations, competition, consumer, superannuation and insurance sectors
Date: 30 October 2023
Source: Federal Register of Legislation
Abstract:
The Governor-General has issued the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Commencement Proclamation 2023 (Cth) (Proclamation) to prescribe 1 January 2024 as the start date for the modernised publication measures under the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Act 2023 (Cth) (Modernising Business Communications Act).
The Governor-General has also made the Treasury Laws Amendment (Modernising Business Communications) Regulations 2023 (Cth) (Amendment Regulations) to modify corporations, consumer credit, insurance and superannuation regulations in line with the Modernising Business Communications Act.
Proclamation
The Proclamation fixes 1 January 2024 as the start date for the modernisation of certain publication requirements in the Corporations Act 2001 (Cth) (Corporations Act), the Competition and Consumer Act 2010 (Cth) (CCA) and other legislation, as set out in Pt 4, Sch 1 of the Modernising Business Communications Act.
Exposure Draft for Australian Sustainability Reporting Standards: disclosure of climate-related financial information
Date: 26 October 2023
Source: Australian Accounting Standards Board (ASSB)
Abstract:
The AASB has released an Exposure Draft for Australian Sustainability Reporting Standards: Disclosure of Climate-related Financial Information (ED SR1) which outlines the proposed climate-related financial disclosure requirements for Australian companies.
The ED SRI Sustainability Reporting Standards are based on the Global Sustainability Standards: IFRS1 (sustainability-related financial information) and IFRS2 (climate-related disclosures) released by the ISSB on 26th June 2023.
The AASB is inviting stakeholders to provide feedback on the sustainability standards proposed by ED SR1 by submitting a comment letter on the AASB website or completing an online survey. An invitation to a roundtable discussion will also be offered. Submissions from stakeholders will be accepted until 1st March 2024.
See the full release by the AASB here.
Please see our previous LLU on the Global Sustainability Standards released by the ISSB here.
Joint ACCC/OAIC Compliance and Enforcement Policy for the Consumer Data Right
Date: 25 October 2023
Source: Office of the Australian Information Commissioner (OAIC)
Abstract:
The Australian Competition Consumer Commission (ACCC) and the Office of the Australian Information Commissioner (OAIC) have published a joint policy to outline their approach toward compliance and enforcement of the Consumer Data Right (CDR).
The CDR allows consumers to have more control over their personal data held by businesses and how this data is shared. The CDR regulatory framework consists of:
- Core provisions under the Competition and Consumer Act 2010 (Cth), the Privacy Act 1988 (Cth) and the Australian Information Commissioner Act 2010 (Cth);
- Rules made under legislation (Rules);
- the Competition and Consumer Regulations 2010 (Cth); and
- Consumer Data Standards made under the Rules.
The OAIC and ACCC will encourage and monitor compliance with the CDR through consumer complaints, mandatory reporting from businesses who hold consumer data, and audits, assessments and information requests for further compliance information.
The OAIC and ACCC will separately exercise discretion for enforcement, giving priority to matters causing harm to the greater CDR regime, widespread detriment to CDR consumers or vulnerable consumers and other conduct of significant public interest. Examples of conduct that are enforcement priorities include…
ASIC revises licensee obligations under the reportable situations regime
Date: 24 October 2023
Source: Australian Securities & Investments Commission (ASIC)
Abstract:
The Australian Securities & Investments Commission (ASIC) has made the ASIC Corporations and Credit (Amendment) Instrument 2023/589 (Instrument), which enacts key alterations to the reportable situations regime. Under the prior regime, Australian financial services (AFS) licensees and Australian credit licensees were mandated to notify ASIC regarding certain reportable situations, particularly ‘significant’ infringements of ‘core obligations’ under s 912D of the Corporations Act 2001 (Cth) (Corporations Act) and s 50A of the National Consumer Credit Protection Act 2009 (Cth).
Under the Instrument , certain breaches relating to misleading or deceptive conduct under subsection 1041H(1) of the Corporations Act and subsection 12DA(1) of the Australian Securities and Investments Commission Act 2001, and false or misleading misrepresentations under s12DB(1) of the ASIC Act, are no longer considered significant breaches of core obligations requiring reporting. For a breach to be eligible for these exemptions, it should…
ASIC Annual Report 2022-23
Date: 20 October 2023
Source: Australian Securities and Investments Commission
Abstract:
Summary originally published by Capital Monitor.
ASIC continued its strong focus on enforcement action in the last financial year, driving positive outcomes for consumers and small businesses, and maintaining trust and integrity in Australia's financial system. Releasing ASIC's 2022-23 Annual Report, Chair Joe Longo said ASIC actively litigated and sought significant penalties to address misconduct. 'Our enforcement action resulted in 35 criminal convictions and almost $190 million in civil penalties and fines imposed by the courts. In addition, we commenced more than 130 new investigations in 2022-23.'
Treasury consults on regulation of digital and crypto assets
Date: 17 October 2023
Source: The Treasury
Abstract:
The Federal Government has released a proposal paper that recommends making crypto exchanges and digital asset platforms subject to existing Australian financial services laws and requiring platform operators to obtain an Australian Financial Services Licence. The proposal paper also recommends requiring digital asset platforms adhere to minimum standards for holding tokens, standards for custody software, and standards when transacting in tokens. Feedback on the proposal paper is due by 1 December 2023, with further consultation on draft legislation planned for 2024.
In recent years, consumers have suffered harm and lost assets due to the collapse of crypto platforms. The proposed regulatory framework intends to increase oversight, protect consumers, support innovation, provide certainty in the industry, and ensure consistency with other jurisdictions.
The proposal paper discusses approaches to regulating digital asset intermediaries, licensing digital asset intermediaries, introducing minimum standards for facility contracts, and introducing minimum standards for ‘financialised functions’.
ASIC's Impact in 2022–23
Date: 16 October 2023
Source: Australian Securities & Investments Commission (‘ASIC’)
Abstract:
The Australian Securities & Investments Commission (ASIC) has released its 2022–23 Annual Report, which has reinforced its commitment to robust enforcement actions to benefit consumers and small businesses while upholding trust in the financial system.
ASIC's efforts in the period resulted in 35 criminal convictions, nearly $190 million in civil penalties and fines imposed by the courts and the initiation of over 130 new investigations. ASIC noted that its’ priorities aligned with emerging trends and challenges in the regulatory landscape, including sustainable finance, the aging population, digital technology risks, and product design and distribution obligations.
ASIC also referenced a number of important outcomes including its first enforcement action against alleged greenwashing, preventing predatory behaviour targeting vulnerable consumers, halting the distribution of poorly designed financial products, prosecuting breaches of directors' duties, and enhancing cyber resilience practices among Australian businesses and overseeing consumer remediation programs. Finally, the agency reinforced that it will continue to focus on partnerships with stakeholders to enhance industry conduct and trust while rigorously enforcing the law.
ASIC extends electronic precontractual disclosure legislative instrument
Date: 16 October 2023
Source: Australian Securities & Investments Commission (ASIC)
Abstract:
ASIC has made ASIC Credit (Amendment) Instrument 2023/675, which extends the operation of ASIC Credit (Electronic Precontractual Disclosure) Instrument 2020/835 for a temporary period of 12 months until 1 October 2024, pending law reform. In September 2023, the Parliament passed the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Bill 2023 to move exemptions or modifications of the law currently in ASIC Credit (Electronic Precontractual Disclosure) Instrument 2020/835 directly into the primary Acts and regulations. The necessary accompanying regulations have not yet been made. Instrument 2020/835 allows credit licensees and representatives to give pre-contractual disclosure to consumers in the same electronic manner that applies to other credit disclosure documents.
Summary originally published by Capital Monitor.
Court rules in favour of ASIC in major ANZ continuous disclosure case
Date: 16 October 2023
Source: Australian Securities & Investments Commission (ASIC)
Abstract:
The Federal Court has issued a ruling against the Australia and New Zealand Banking Group Limited (ANZ), asserting that the bank had violated continuous disclosure laws (under s 674(2) of the Corporations Act) during a $2.5 billion institutional share placement in 2015. The breach resulted from ANZ's failure to disclose crucial information concerning the allocation of shares to underwriters. ASIC Deputy Chair Karen Chester highlighted that ANZ had neglected to inform the market that underwriters for the share placement had purchased nearly a third of the shares, amounting to approximately $790 million.
Ms Chester added that proper disclosure is fundamental to ensuring fair and efficient markets and investors must be fully apprised of information likely to significantly impact the price or value of a security. This significant decision reinforces the essential role of continuous disclosure rules in upholding market integrity. It also underscores that a substantial acquisition of shares by underwriters during capital raising can constitute price-sensitive information necessitating public disclosure. ASIC will proceed to submit its recommendations regarding suitable penalties, with the final judgment on…
ASIC Action Against Cigno Australia and BSF Solutions for Alleged Unlicensed Credit Operations
Date: 4 October 2023
Source: Australian Securities & Investments Commission (‘ASIC’)
Abstract:
The Australian Securities and Investments Commission (ASIC) has initiated civil penalty proceedings against Cigno Australia Pty Ltd (Cigno) and BSF Solutions Pty Ltd (BSF), and their respective directors, concerning allegations of unlicensed credit activity.
Between July and December 2022, ASIC claims that the two companies provided short-term credit to over 100,000 consumers through a 'No Upfront Charge Loan Model' without holding valid Australian credit licenses. Under this scheme, consumers were charged excessive fees, sometimes amounting to more than 600% of the total loan value, which is in violation of the National Consumer Credit Protection Act 2009 (Cth). ASIC is concerned that this lending model was intentionally designed to circumvent consumer protection laws, allowing the companies to impose substantial fees on vulnerable and financially distressed consumers.
Moreover, ASIC also alleges that Cigno and BSF charged consumers over $70 million in fees while providing more than $34 million in loans without the requisite licenses. ASIC also believes that both directors participated in these unauthorised credit operations.
ASIC is seeking various legal remedies including declarations, pecuniary penalties, adverse…
ASIC & APRA jointly release information to assist ADIs with their transition the FAR
Date: 4 October 2023
Source: asic.gov.au
The Australian Securities & Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) as joint administrators (collectively the Regulators) of the Financial Accountability Regime (FAR) have published information paper (RG 278). The purpose of the paper is to assist Authorised Deposit-taking Institutions (ADIs) and their licensed non-operating holding companies (NOHCs) transition from the Banking Executive Accountability Regime to the FAR. It outlines the key activities that both large and small ADIs are required to undertake to transition to the FAR (including but not limited to determining their entity profile, allocating additional prescribed responsibilities to existing or new accountable persons and allocating all applicable key functions to relevant accountable persons).
In addition, RG 278 includes:
- key dates for ADIs and NOHCs in respect to the FAR commencement;
- an ADI accountability statement guidance and template; and
- an appendix which details the key differences between the BEAR and the FAR requirements.
ANZ penalised $15M for misleading customers about credit card funds
Date: 26 September 2023
Source: Australian Securities & Investments Commission (ASIC)
Abstract:
The Federal Court has ordered Australia and New Zealand Banking Group Limited (ANZ) to pay a pecuniary penalty of $15M after finding that it misled customers about the available funds in certain credit card accounts. The court declared that ANZ made false or misleading representations in contravention of s 12DB(1)(g) of the Australian Securities and Investments Commission Act 2001 (Cth) and failed to do all things necessary to ensure that the credit activities authorised by its credit licence were engaged in efficiently, honestly and fairly in contravention of s 47(1)(a) of the National Consumer Credit Protection Act 2009 (Cth).
ANZ admitted to making false or misleading representations on its internet banking platform, mobile app and at ATMs. ANZ had falsely indicated that customers could obtain a cash advance from funds stated to be in their ‘Available Funds’ without incurring fees or interest. However, this ‘Available Funds’ amount was higher than the sum actually available for withdrawal because ANZ had not cleared deposits into the credit card accounts.
TNFD releases final recommendations for nature-related disclosures
Date: 25 September 2023
Source: The Taskforce on Nature-related Financial Disclosures (TNFD)
On 18 September 2023 at Climate Week NYC, the TNFD released its final recommendations for nature-related risk management and disclosure (TNFD recommendations). The TNFD recommendations provide a framework for reporting and assessing nature-related risks and opportunities to assist companies and financial institutions to better understand, report and act on their dependencies and impacts on nature, and to align their activities with global goals for biodiversity and climate.
The final recommendations build on the previous draft framework that was published in July 2023, and incorporate feedback received during an extensive market consultation and testing process. Consistent with the approach of the Task Force on Climate-related Financial Disclosures, the TNFD recommendations cover four pillars: governance, strategy, risk & impact management, and metrics & targets, and are designed to enable integrated nature-related and climate-related disclosures. The TNFD also provides additional guidance for financial institutions and specific biomes.
To assist companies and financial institutions in (voluntarily) adopting its recommendations, the TNFD has also published implementation guidance and other supporting materials including guidance on the identification and assessment of nature-related issues, found here.
ASIC urges AFS licensees to strengthen remediation procedures
Date: 26 September 2023
Source: Australian Securities & Investments Commission (ASIC)
Abstract:
Following a review of the remediation policies and procedures of several large financial institutions, the Australian Securities & Investments Commission (ASIC) has called on Australian financial services and credit licensees to ensure that they remediate affected consumers quickly and fairly in accordance with ASIC’s Regulatory Guide 277: Consumer Remediation (RG 277). RG 277, which replaced and expanded upon the scope of Regulatory Guide 256: Client review and remediation conducted by advice licensees, offers guidance for Australian financial services and credit licensees on best practices for consumer remediation programs initiated on or after 27 September 2022.
ASIC’s review identified certain practices that were inconsistent with the obligations under RG 277 for licensees to be proactive, timely and fair in their approach to consumer remediation. Key findings from the review include…
APRA releases new draft of superannuation prudential standard for consultation
Date: 25 September 2023
Source: Australian Prudential Regulation Authority (‘APRA’)
Abstract:
The Australian Prudential Regulation Authority (APRA) has announced plans to modify its core superannuation prudential standard, SPS 515 Strategic Planning and Member Outcomes, with the aim of improving outcomes for members in the superannuation system.
The regulator has released a discussion paper for stakeholder consultation on the proposed revisions, which focus on three main areas:
- Ensuring that expenditure requirements are aligned with the best financial interest duty and, for retirees, help uphold the retirement income covenant. Trustees are now required to provide valid reasons for expenses related to business operations;
- Raising the standards for how trustees handle financial resources. The draft SPS 515 is intended to guarantee that trustees consistently maintain a prudent approach in matters like establishing fees and managing reserves funded by members.
- Enhancing the handling of risks associated with members being moved between different funds.
APRA has also indicated that it would retire its guidance circular on the "sole purpose test," stating that it is outdated and no longer needed.
Licensing and professional registration activities - 2023 update
Date: 25 September 2023
Source: Australian Securities & Investments Commission (‘ASIC’)
Report 772 Licensing and professional registration activities: 2023 update (REP 772) outlines ASIC's licensing and professional registration activities, discusses new and proposed changes to processes, and notes other ASIC work that affects licensees. ASIC's Chief Executive Officer, Warren Day said, 'Our report highlights the important gatekeeping role served by ASIC's Licensing function. It ensures applicants seeking an Australian financial services licence, credit licence or professional registration meet the high standards required to provide these regulated services.' In the same period, 401 licence applications were withdrawn or rejected for lodgement, 515 licences were cancelled and 26 licences were suspended.
ASIC’s proposed new and updated guidance covers:
Summary originally published by Capital Monitor.
Government releases draft reforms to Personal Property Securities Act
Date: 25 September 2023
Source: Treasury.gov.au
On 22 September 2023 the Australian Government (Government) released for consultation exposure drafts of the Personal Property Securities Amendment (Framework Reform) Bill 2023 (Amendment Bill) and new Personal Property Securities Regulations 2023 (new PPS Regulations). The Amendment Bill amends the Personal Property Securities Act 2009 (PPS Act) and adopts the majority of recommendations contained in the statutory review of the PPS Act released by Government in 2015 (Whittaker Review).
The Government has also released a Recommendations Index which sets out the Government’s response (either: accept, accept in part, accept to consider and consult or reject) to each of the 394 recommendations contained in the Whittaker Review. The Government has accepted to consider and consult on 19 recommendations and is seeking further views on 16 of these recommendations before settling on a finalised position. Accordingly, these recommendations are not canvassed by the exposure drafts of the Amendment Bill and proposed new PPS Regulations.
NAB penalised $2.1M for unconscionable conduct in wrongfully overcharging customers
Date: 22 September 2023
Court: Federal Court of Australia
Judge(s): Derrington J
Judgment date: 22 September 2023
Catchwords: Civil penalties – contravention of financial services laws – unconscionable conduct in contravention of Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) s 12CB(1) – whether the regulator has alleged one contravention or multiple.
Pecuniary penalties – appropriate penalty to be imposed pursuant to ASIC Act s 12GBA – whether the unconscionable conduct was “deliberate” – whether the contravenor has previously been found to have engaged in any “similar conduct”.
Abstract:
In Australian Securities and Investments Commission v National Australia Bank Limited (No 2) [2023] FCA 1118, the Federal Court ordered National Australia Bank Limited (NAB) to pay a pecuniary penalty of $2.1 million for engaging in unconscionable conduct contravening s 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) by charging periodic payment fees despite knowing it had no contractual entitlement to do so.