Financial Services in Focus – Issue 5

Funds and financial products

ASIC releases guidance for its oversight of the Australian Financial Complaints Authority

On 20 June ASIC released Regulatory Guide 267 Oversight of the Australian Financial Complaints Authority.

ASIC states they are releasing new guidance in advance of Australian Financial Complaints Authority’s commencement to provide policy certainty for stakeholders and to support an efficient transition to the new single scheme.

ASIC releases 6 monthly report on decisions regarding relief applications

On 15 June ASIC released Report 574 Overview of decisions on relief applications (October 2017 to March 2018) (REP 574).

ASIC states REP 574 sets out various publications released by ASIC during the six months that may be relevant to prospective applicants for relief, and summarises examples of situations where ASIC has exercised, or refused to exercise, its exemption and modification powers under the Corporations Act and the licensing and responsible lending provisions of the National Consumer Credit Protection Act 2009 (Cth).

Government consults on Corporate Collective Investment Vehicle legislation

On 13 June the Government released for public consultation the first tranche of the Treasury Laws Amendment (Corporate Collective Investment Vehicle) Bill 2018 and Explanatory Materials.

The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer, stated the Corporate Collective Investment Vehicle (CCIV) will allow Australian fund managers to market to participating Asian financial markets using a well-recognised corporate structure vehicle, complements the Asia Region Funds Passport initiative which the Government introduced into Parliament earlier this year.

The Minister also stated that the second tranche of consultations will cover the remaining substantive aspects of the regulatory framework for CCIVs, including external administration, consequential amendments to apply the Chapter 7 financial services regime to CCIVs, and penalty provisions.

For further information, see our article.

Submissions are due by 11 July.

ASIC implements financial benchmark regulatory regime

On 6 June, ASIC made the ASIC Corporations (Significant Financial Benchmarks) Instrument 2018/420, which specifies five significant financial benchmarks. In the Explanatory Statement, ASIC states the purpose of the instrument is to declare five financial benchmarks as significant financial benchmarks which, in ASIC’s opinion at the time of making the instrument, meet each of the criteria in subsection 908AC(2) of the Corporations Act.

On 6 June, ASIC made the ASIC Financial Benchmark (Administration) Rules 2018, which impose certain key obligations on licensed benchmark administrators and require contributors to licensed benchmarks to co-operate with ASIC. In the Explanatory Statement, ASIC states the purpose of the instrument is to implement a financial benchmark administration regime designed to ensure significant financial benchmarks are robust and reliable, and that the Rules impose certain key obligations on benchmark administrator licensees relating to their governance and the financial benchmarks they administer, and also require contributors to licensed benchmarks to co-operate with ASIC.

On 6 June, ASIC made the ASIC Financial Benchmark (Compelled) Rules 2018 which enables ASIC to require, by written notice, the continued administration of a significant benchmark or compelled submissions to a significant benchmark. In the Explanatory Statement, ASIC states the purpose of the instrument is to implement a financial benchmark administration regime designed to ensure significant financial benchmarks are robust and reliable.

ASIC states that these regulatory steps follows the implementation of new Bank Bill Swap Rate (BBSW) methodology, with the benchmark now calculated directly from market transactions during a longer rate-set window and involving a larger number of participants (as we reported earlier).

Banking

Government fixes charges to be paid by representative offices of foreign banks in Australia

On 12 June the Australian Prudential Regulation Authority Instrument fixing charges No. 4 of 2018 was registered.

According to the Explanatory Statement, the instrument sets out the charges in respect of applications for consent under section 67 of the Banking Act 1959 to establish or maintain representative offices of overseas banks in Australia and for the costs or expenses incurred or to be incurred by APRA in monitoring the activities of such representative offices in Australia and the overseas banks’ compliance with the conditions imposed upon APRA’s consent.

Other financial services regulation

ASIC agrees to IOSCO memorandum on cross-border enforcement co-operation

On 22 June, ASIC became one of the first signatories to the IOSCO Enhanced Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (EMMoU), an enhanced standard for cross-border enforcement cooperation.

ASIC states that, by signing the EMMoU, ASIC has highlighted its power to assist foreign regulators by compelling physical attendance for testimony, obtaining and sharing audit work papers, communications and other information relating to the audit and review of financial statements, and provide guidance on freezing of assets.

Tax

Government releases exposure draft legislation on Attribution Managed Investment Trusts (AMITs)

On 18 June, the Government released its exposure draft legislation proposing a package of technical amendments to income tax legislation relating to the new tax system for Managed Investment Trusts (MIT).

The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer, stated the amendments will clarify the law, providing industry with increased investment certainty and should assist those entities considering whether to opt into the attribution MITs regime.

According to the Exposure Draft Explanatory Materials, the amendments clarify the operation of the income tax law applying to MITs and Attribution Managed Investment Trusts (AMITs) and make a number of modifications so that the new tax system for managed investment trusts operates as intended.

Submissions are due by 16 July.


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