Financial Services in Focus – Issue 97

ASIC announces extended relief for employee redundancy funds

On 30 September, ASIC announced it has extended existing relief granted to operators and promoters of employee redundancy funds from the AFS licensing and managed investment provisions of the Corporations Act, which was due to expire on 1 October, to facilitate further consultation by ASIC on the framework for the regulation of these funds.

The transitional relief is provided under ASIC Corporations (Amendment) Instrument 2024/618 and will expire on 1 April 2026.

Under the transitional relief, entities relying on the relief will now be required to notify ASIC by 31 October. 

ASIC intends to consult further in early 2025.

ASIC announces it will allow instrument for primary production managed investment schemes to expire

On 26 September, ASIC announced specific requirements regarding land used in primary production managed investment schemes under ASIC Corporations (Land Holding for Primary Production Schemes) Instrument 2024/15 will no longer apply from 1 October 2024. ASIC opted to allow the instrument to expire because it considers the requirements no longer necessary. 

APRA amends operational risk financial requirements for superannuation trustees

On 24 October, APRA amended the prudential requirements for superannuation trustees regarding operational risk financial requirements (ORFR) set out in Prudential Standard SPS 114 Operational Risk Financial Requirement (SPS 114) and related guidance.

APRA states the changes aim to strengthen operational resilience by ensuring trustees can better access the financial resources held to meet the ORFR when needed and to maintain an appropriate level of reserving.

The key changes are to:

• clarify the purpose of the ORFR; 
• widen the allowable range of uses for the ORFR;
• introduce a clear and direct relationship with Prudential Standard CPS 230 Operational Risk Management (CPS 230); and 
• amend the APRA notification requirements to facilitate further use of the ORFR.

The amended SPS 114 will take effect from 1 July 2025.

A copy of the consultation response paper and links to the updated standard and guidance are available on the APRA website.

APRA releases letter to RSE licensees on intensified supervision approach to fund-level expenditure

On 22 October, APRA released its letter to all RSE licenses, outlining its approach for intensifying supervision of fund-level expenditure.

APRA states the letter provides RSE licensees with clarity about APRA’s planned activity in this area over the next 12 months, in accordance with APRA’s recently released Corporate Plan.

The letter is accessible on the APRA website.

AFCA consults on superannuation death benefits Approach

On 7 October, AFCA announced it is inviting feedback from stakeholders on draft amendments to AFCA’s ‘Approach to superannuation death benefits’ (Revised Approach). 

The Revised Approach document includes minor clarifications to AFCA’s existing guidance on handling complaints about the distribution of superannuation death benefits and includes greater detail about:

• how AFCA applies definitions of terms such as ‘dependant’ and ‘spouse’;
• the circumstances in which AFCA might consider it appropriate to include adult children and legal personal representatives in distributions;
• trusts for minor children; and
• how AFCA approaches cases where there has been violence or abuse in a relationship, or a claimant has been involved in the death of the fund member.

The consultation period will run until 25 October.

APRA releases performance metrics and insights package to improve transparency in superannuation

On 24 September, APRA released the Comprehensive Product Performance Package (CPPP). CPPP brings together the product performance metrics underpinning the legislated performance test and APRA’s superannuation heatmaps to increase transparency and sharpen superannuation trustees’ focus on improving member outcomes. 

The CPPP covers 876 MySuper and choice products, which, collectively, represent most types of investment offerings for accumulation members. 

APRA releases response to consultation on enhancements to superannuation data collections

On 20 September, APRA issued a response paper to its most recent consultation on enhancements to superannuation data collections regarding indirect investment costs and trustee financial statements reporting. APRA consulted on proposed enhancements relating to trustee financial statements, indirect investment costs, trustee and fund profiles, as well as investments. 

APRA has worked closely with industry to increase transparency by enhancing the breadth, depth and quality of APRA’s superannuation data collection. Industry submissions to the consultation were largely supportive of APRA’s proposals. Suggestions were provided to reduce reporting burden, and some concerns were raised on the clarity of reporting scope and instructions. APRA has responded to the feedback by updating reporting instructions and, where appropriate, revising the reporting standard to reduce the burden on supervised entities.

Treasury releases details about Payday Super measure

On 18 September, Treasury published a fact sheet, which provides further implementation details about the government’s Payday Super measure, part of the Securing Australians’ Superannuation Package announced in the 2023-24 budget.

From 1 July 2026, employers will need to pay Superannuation Guarantee (SG) contributions to employees with every pay cycle, instead of quarterly. 

Treasury announces consultation on legacy retirement product conversions and reserves

On 17 September, Treasury released for consultation the exposure draft of the Treasury Laws Amendment (Self-managed superannuation funds—legacy retirement product conversions and reserves) Regulations 2024 (Draft Regulations) and accompanying Explanatory Statement .

The Draft Regulations:

• enable individuals to exit a specified range of legacy retirement products for up to five years; and
• allow for more flexible pathways to make allocations from a reserve by:
  • providing that where a reserve supported an income stream that is ceased, and the reserve is allocated to the former recipient of that income stream, it will be exempt from both contribution caps; and
  • counting other reserve allocations towards an individual’s non-concessional contributions instead of their concessional contributions.

The draft regulations apply to legacy lifetime, life expectancy and market-linked superannuation income stream products that commenced prior to 20 September 2007 or were commenced as a result of a conversion of an earlier legacy product that started prior to that date.

Consultation closed on 8 October.

APRA and ASIC release notes on Superannuation CEO Roundtables - June and July 2024

On 2 September, APRA and ASIC released the public notes on the Superannuation CEO Roundtables held on 18 June 2024 and 16 July 2024. The roundtables were attended by 12 superannuation Chief Executive Officers, representing a broad cross-‑section of the industry across the two events. 

ASIC’s Moneysmart calls on super funds to better engage millennials following findings from industry roundtable 

On 2 September, ASIC called on super funds to better engage millennial members following new research from ASIC’s Moneysmart. The research revealed nearly half (48%) of surveyed millennials admit they are not knowledgeable about maximising their super. 

Building on the insights from the roundtable, ASIC’s Moneysmart is launching a consumer awareness campaign targeting millennials. The campaign will spotlight the benefits of engaging with super early and often, demonstrating how regular contributions can compound significantly over time.

View a roundtable summary report, ‘Setting up millennials for super success’.

Government announces ban to use of genetic testing in life insurance

On 11 September, the federal government announced it will implement a total ban on the use of predictive genetic test results in life insurance underwriting. This ban will be reviewed every five years. 

View the Treasury’s media release.

AFCA consults on superannuation complaint handling Approaches

On 9 September, AFCA announced it is inviting feedback from stakeholders on two draft Approach documents focusing on key areas within superannuation complaints regarding insurance. The documents under consultation are: 

• AFCA’s ‘Approach to sections 29(6) and 29(7) of the Insurance Contracts Act 1984 (superannuation)’ (new). This Approach addresses the application of sections 29(6) and 29(7) of the Insurance Contract Act; and 
• AFCA’s ‘Approach to delayed insurance claims in superannuation’ (amended). This amended Approach includes minor clarifications without substantive changes to the existing Approach. 

The consultation period ran until 30 September.

ASIC releases updated guidance for participants in carbon markets

On 30 September, ASIC released its updated regulatory guidance for carbon market participants in Regulatory Guide 236 Do I need an AFS licence to participate in carbon markets? (RG 236). RG 236 provides guidance for participants in the carbon markets, including people involved in the Australian Carbon Credit Unit (ACCU) scheme, responsible emitters for safeguard facilities, market intermediaries and advisers to participants in the carbon market. 

The guidance will assist participants in carbon markets in deciding whether they need an AFS licence to engage in activities associated with participation in the carbon market. These activities may involve providing a financial service, such as providing financial product advice, or dealing in emissions units regulated as financial products, including ACCUs and Safeguard Mechanism Credits. The updates to RG 236:

• address the safeguard mechanism reforms that commenced on 1 July 2023; and
• reflect changes to the ACCU Scheme that have occurred since RG 236 was last re-issued in May 2015.

ASIC will also update Information Sheet 156 Regulated emissions units: Applying for or varying an AFS licence (INFO 156) to address the safeguard mechanism reforms and updates made in RG 236. ASIC expects to publish the INFO 156 update in quarter four of 2024.

ASIC announces extension of Consultation Agreement with Financial Markets Standards Board

On 26 September, ASIC announced the two-year extension of its Consultation Agreement (Agreement) with the Financial Markets Standards Board (FMSB) to 25 September 2026.

ASIC and FMSB first signed the Agreement in September 2022 to promote global standards for fair and effective wholesale financial markets, and to formalise ASIC’s active interest in the development of global industry standards. The two-year extension will further facilitate FMSB’s consultation with ASIC in the development of draft standards and other publications, as well as providing ASIC with periodic updates on FMSB’s strategy.

RBA releases assessment of ASX Clearing and Settlement Facilities for September 2024

On 25 September, the RBA released its 2024 Assessment of the ASX Clearing and Settlement Facilities , which assesses the performance of the CS facilities against the RBA’s Financial Stability standards. The RBA has issued several recommendations, including that ASX should:

• continue to place high priority on remediating ageing technology assets;
• reduce the complexity of vendor management frameworks and ensure appropriate controls and processes are in place for all key vendors supporting the CS facilities; and 
• complete an independent review of its internal strategy to address its overall heightened level of risk.

ASIC receives new powers under financial market infrastructure reforms

On 19 September, ASIC received new powers essential to ensuring a stable and efficient Australian financial system, under new financial market infrastructure (FMI) laws. 

The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Cth) (Bill) strengthens the existing regulatory regime, ensuring ASIC and the Reserve Bank of Australia (RBA) have strong and dependable powers to monitor, manage and respond to risks related to FMIs. The Bill implements the Financial Market Infrastructure Regulatory Reforms: Advice to Government from the Council of Financial Regulators, July 2020, which made sixteen recommendations to government. ASIC will now plan and implement the new FMI regulatory regime and update its website with further publications and information, including the development of updated regulatory guidance to assist industry to comply with the enhanced regulatory framework for FMIs.

ASX releases consultation paper on pricing policy for clearing, settlement and issuer services

On 16 September, ASX released a consultation paper titled Cash Equities Clearing and Settlement Services: Pricing Policy Consultation Paper and an accompanying set of Q&As. The consultation paper proposes to adopt a new pricing policy for ASX’s clearing, settlement and issuer services from 1 January 2025. 

ASX requests feedback and responses on the consultation to be provided by 25 October.

ASIC announces extended reportable situations relief and personal advice record keeping requirements

On 24 September, ASIC announced it has made the following two new legislative instruments:

•  ASIC Corporations and Credit (Breach Reporting–Reportable Situations) Instrument 2024/620; and 
• ASIC Corporations Record-Keeping Requirements for Australian Financial Services Licensees when Giving Personal Advice) Instrument 2024/508. 

These new instruments extend on the same terms, the relief from reporting requirements for the reportable situations’ regime and the requirement to prescribe record keeping requirements for personal advice situations, provided under the former instruments due to expire this month: 

• ASIC Corporations and Credit (Breach Reporting—Reportable Situations) Instrument 2021/716; 
• ASIC Credit (Breach Reporting—Prescribed Commonwealth Legislation) Instrument 2021/801; and 
• ASIC Class Order 14/923 Record-keeping obligations for Australian financial services licensees when giving personal advice.

ASIC will continue to consider whether additional reportable situations regime relief is appropriate.

AUSTRAC provides clarification on upcoming changes to enrolment and registration forms

On 14 October, AUSTRAC announced  a new and improved enrolment and registration experience will be introduced via AUSTRAC Online in November 2024. The new forms will replace the current forms in AUSTRAC Online that used to enrol or register a new business or update details. 

AUSTRAC releases new guidance on outsourcing AML/CTF functions

On 1 October, AUSTRAC released new outsourcing guidance to help reporting entities identify and manage the risks that may arise when outsourcing anti-money laundering and counter-terrorism financing (AML/CTF) functions. In summary, the guidance recommends reporting entities:

• identify the risks that may arise through outsourcing;
• conduct due diligence on outsourcing providers;
• understand restrictions on sharing AML/CTF information;
• use a written agreement for outsourcing;
• monitor and review ongoing outsourcing arrangements; and
• document procedures for managing outsourcing arrangements in their AML/CTF program.

AUSTRAC releases updated ML/TF risk assessments guidance for businesses

On 1 October, AUSTRAC released updated information to help reporting entities effectively use AUSTRAC guidance and feedback when assessing money laundering and terrorism financing (ML/TF) risks. The updated guidance provides important information about:

• how to take AUSTRAC guidance and feedback into account;
• the key sources of AUSTRAC guidance on ML/TF risks;
• how to determine whether certain guidance or feedback is relevant to your business; and
• other sources of information that may be useful.

The new ML/TF risk assessment guidance can be read in full here.

AUSTRAC requests feedback on draft updates to alternative identification procedures guidance

On 1 October, AUSTRAC requested feedback on draft updates to its guidance on using alternative identification procedures where customers who may have difficulty in providing standard documentation. The guidance is being updated to support financial inclusion outcomes and address industry feedback. AUSTRAC reminded reporting entities that using alternative identification procedures must always be a risk-based decision that factors in individual circumstances and the information available.

A summary of the changes can be viewed here. Feedback must be provided by 30 October.

AUSTRAC releases new sector-specific resources for suspicious activity indicators

On 1 October, AUSTRAC released new lists of suspicious activity indicators to help reporting entities identify potential ML/TF and other serious and organised criminal activity. Sectors receiving specific indicators include banking, digital currency (cryptocurrency), financial planners, life insurance, remittance service providers, securities and derivatives, superannuation and non-bank lenders and financiers.

AUSTRAC releases National Risk Assessments

On 1 October, AUSTRAC announced that it, along with the Attorney-General, had formally released their unclassified National Risk Assessments of money laundering and terrorism financing at the National Press Club in July 2024. The risk assessments provide a collective understanding of the scale, sophistication and threat of ML/TF crimes in Australia. 

AUSTRAC discusses AML/CTF Amendment Bill introduced in Parliament

On 11 September, the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Amendment Bill 2024 (Bill) was introduced into Parliament.

The Bill, if passed, would reform Australia’s anti-money laundering and counter-terrorism financing regime, which is comprised of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the AML/CTF Act), the Anti-Money Laundering and Counter-Terrorism Rules Instrument 2007 (No.1) (the AML/CTF Rules) and associated regulations, and would repeal the Financial Transaction Reports Act 1988 (FTR Act).

Generally, the purpose of the reforms proposed in the Bill are to:

• simplify and improve the legislative framework;
• ensure Australia addresses gaps in the Financial Action Task Force (FATF) Standards particularly regarding extending the AML/CTF regime to ‘tranche two’ entities (real estate professionals, professional service providers including lawyers, accountants and trust and company service providers, and dealers in precious stones and metals), and including additional reporting entities as ‘virtual asset service providers’; and
• modernise the AML/CTF regime to reflect changing business structures, technologies and illicit financing methodologies.

For further information, read our article summarising the key amendments to the AML/CTF regime.

RBA releases review of the Term Funding Facility 

On 9 October, the RBA released its Review of the Term Funding Facility (Review). The Term Funding Facility (TFF) provided low-cost, fixed-rate three-year funding to banks operating in Australia against high-quality collateral.It was introduced as part of a comprehensive policy package to support the Australian economy in response to the COVID-19 pandemic, at a time when wholesale funding markets had been significantly disrupted.

Key takeaways of the Review included: 

• the policy goals of the TFF were met;
• the design of the TFF involved trade-offs between the degree of support provided to the economy, the responsiveness to changing economic conditions, and the risk exposures (or potential costs) to the central bank;
• the Board has agreed that the supporting material for any future policy decisions involving unconventional policy measures should include strengthened assessment of a broad range of scenarios that might crystallise during the lifetime of the policy;
• open lines of communication between the RBA, APRA and banks, in combination with forward planning, contributed to the effective management of financial stability risks during the pandemic; and
• should the RBA ever again reach the extreme circumstances where its conventional monetary policy tool had been employed to the full extent possible but economic conditions required further policy easing, the use of UMP tools would again need to be considered.

RBA releases Financial Stability Review 

On 26 September, the RBA released its half-yearly Financial Stability Review (Review). The Review provides the RBA’s assessment of the current resilience of the financial system and potential risks to financial stability. The Review found that global financial vulnerabilities remain, but the Australian financial system is proving resilient. 

APRA remakes Prudential Standard APS 117 on interest rate risk

On 23 September, APRA released its response to its July 2024 consultation on the remaking of Prudential Standard APS 117 Capital Adequacy: Interest Rate Risk in the Banking Book (Advanced ADIs) (Standard), which is due to sunset on 1 April 2025.

APRA received no submissions to its proposal to remake the Standard. As a result, APRA has now remade the Standard as a transitional measure, so that it will continue to apply after 1 April 2025 until Prudential Standard APS 117 Capital Adequacy: Interest Rate Risk in the Banking Book is effective on 1 October 2025.

APRA proposes update to bank capital framework to strengthen crisis preparedness

On 10 September, APRA released for consultation changes to the capital framework for banks regarding hybrid instruments to simplify and improve the effectiveness of bank capital in a crisis. The proposed changes seek to support financial system stability at times of crisis with simpler and more certain resolution of banks in the unlikely event of failure. 

APRA is proposing that banks phase out the use of AT1 capital instruments (often called hybrid bonds) and replace them with cheaper and more reliable forms of capital that would absorb losses more effectively in times of stress.

APRA welcomes stakeholder feedback on the framework design, expected impacts and other implementation considerations. 

ASIC publishes 2023-24 Annual Report

On 22 October, ASIC released its Annual Report for 2023-24. A summary of what ASIC considers its recent important outcomes is available is its media release, which includes what it states is several regulatory and enforcement firsts, including the first win in a greenwashing civil penalty action, the first stop order on a life insurance product and the first infringement notice issued to a market operator, the ASX.

ASIC announces that changes to OTC derivative transaction reporting are now in effect

On 21 October, ASIC announced the ASIC Derivative Transaction Rules (Reporting) 2024 (2024 Reporting Rules) have replaced the ASIC Derivative Transaction Rules (Reporting) 2022.

The 2024 Reporting Rules introduce changes to:

• align with international reporting standards;
• consolidate transitional provisions and exemptions; and
• ensure reporting requirements are fit-for-purpose.

ASIC proposes updates to regulatory guides on relief applications and no-action letters

On 21 October, ASIC released proposed changes to Regulatory Guide 51 Applications for relief (RG 51) and Regulatory Guide 108 No-action letters (RG 108) to ensure the currency of its guidance.

According to ASIC, the proposed updates to RG 51 are the following:

• consolidate ASIC’s separate guidance on how it charges fees for applications;
• combine relevant guidance on procedural fairness and rights of review;
• revise content on what to include when making an application, and
• amend the description of ASIC’s approach to applications, considering the decision in Lantern Hotel Group and Australian Securities and Investments Commission [2015] AATA 428.

According to ASIC, the proposed updates to RG 108 are the following:

• simplify the existing guidance on ‘what is a no-action letter’ and ‘why ASIC gives no-action letters’
• make minor changes to the factors that make it more likely that ASIC will give a no-action letter
• consolidate guidance on no-action requests and class no-action requests to avoid repetition, and
• introduce content to highlight the absence of review rights and need to lodge an application through the ASIC Regulatory Portal and pay an application fee.

Consultation closes on 18 November.

APRA releases material service provider register template

On 17 October, APRA released a material service provider register template as announced in the Response to submissions – CPG Operational Risk Management publication in June 2024. 

Following industry feedback, the template was developed to assist entities in demonstrating the links between their critical operations and the material service providers they rely on. The use of the template is APRA’s preferred method for regulated entities to submit their registers to APRA for meeting the requirement of paragraph 51 of Prudential Standard CPS 230 Operational Risk Management (CPS 230). A completed material service provider register is to be submitted  to APRA by ADIs, superannuation trustees and insurers by 1 October 2025.

Treasury publishes 2023–24 Annual Report 

On 17 October, Treasury released its 2023-24 Annual Report (Report). 

The Report outlines performance against outcome, program and performance information contained in the Portfolio Budget Statements and the Treasury Corporate Plan.

APRA publishes 2023-24 Annual Report

On 16 October, APRA published its Annual Report for the 2023-24 financial year.

In 2023-24, APRA undertook a broad range of activities across its supervisory, policy and resolution responsibilities, in line with strategic priorities outlined in APRA’s Corporate Plan. The Annual Report sets out a detailed overview of APRA’s performance against its Corporate Plan.

RBA announces review of merchant card payment costs and surcharging

On 15 October, the RBA announced its review into retail payments regulation, which will examine the costs merchants face when accepting card payments and the framework for surcharging. It also released an Issues Paper, inviting stakeholders to provide feedback. 

Stakeholders can provide written submissions by 3 December.

ASIC issues 2023-24 update on licensing and professional registration activities

On 11 October, ASIC provided an update on its licensing and professional registration activities to assist current and prospective AFS and credit licensees understand the licencing regime.

Report 797 Licensing and professional registration activities: 2024 update (REP 797) provides the latest information on registration and licence applications from the 2023-24 financial year and key changes to licensing processes. 

ASIC reissues Regulatory Guide 121 on doing financial services business in Australia

On 20 September, ASIC announced it has reissued Regulatory Guide 121 Doing financial services business in Australia (RG 121) to reflect changes to the law and legislative relief granted by ASIC. The reissued RG 121 includes amendments to descriptions of AFS licensing exemptions and relief, and updates ASIC’s guidance on the courts’ interpretation of ‘carrying on a business in Australia’.

RBA and Treasury release joint report on Central Bank Digital Currency and the future of digital money in Australia

On 18 September, the RBA and Treasury released a report summarising research on the central bank digital currency (CBDC), and how this has informed their assessment of CBDC issues in Australia. The report also highlights the role a wholesale CBDC, alongside other forms of digital money and infrastructure upgrades, could play in enhancing the functioning of wholesale markets in Australia. However, the report concludes a clear public interest case to issue CBDC has yet to emerge in Australia. 

The report also sets out a three-year roadmap for future work on digital money in Australia. 

ASIC urges businesses to prepare for mandatory climate reporting

On 18 September, ASIC urged all reporting entities to begin preparing for Australia’s new climate disclosure regime. From 1 January 2025, many large Australian businesses and financial institutions will need to prepare annual sustainability reports containing mandatory climate-related financial disclosures, following the passage of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Cth). 

The mandatory climate reporting requirements will be phased in over the next three years across three groups of reporting entities, commencing on or after 1 January 2025. 

To assist reporting entities, ASIC has established a dedicated sustainability reporting page on the ASIC website to provide information about the new regime and how it will be administered.

Senate committee inquiry into wealth management companies

On 17 September, the Senate referred an inquiry into Wealth Management Companies to the Senate Economics References Committee for inquiry and report by the last sitting day of March 2025.

The Terms of Reference state that the matter referred is the reason for the collapse of wealth management companies, and the implications for the establishment of the Compensation Scheme of Last Resort (CSLR) and challenges to its ongoing sustainability, with particular reference to Dixon Advisory & Superannuation Services Pty Limited (Dixon Advisory) as an example.

The closing date for submissions is 1 November.

Treasury releases draft legislation on the Scams Prevention Framework

On 13 September, Treasury released exposure draft legislation and accompanying explanatory materials, which seek to implement the ‘Scams Prevention Framework’.

A summary of the reforms has been prepared by Treasury and is available here.

You can also our article on these reforms.

Consultation closed on 4 October.

Treasury seeks feedback on establishing a ‘Front Door’ for major transformational investments

On 13 September, Treasury announced it is seeking stakeholder feedback on the establishment a new ‘Front Door’ for major transformational investments. This initiative, part of the ‘Future Made in Australia’ package from the 2024-25 budget, aims to make it simpler to invest in Australia and attract more global and domestic capital.

The consultation paper, ‘Establishing a ‘Front Door’ for major, transformational projects’ can be viewed here.  According to the consultation paper, the Front Door would address key coordination challenges, including providing concierge and facilitation services to navigate Australia’s comprehensive regulatory frameworks, and a clear entry point for complex, major transformational investment proposals.

Consultation closed on 4 October.

ASIC releases review on distribution practices for DDO compliance (REP 795)

On 10 September, ASIC published its findings from the surveillance of 19 issuers of high-risk investment, insurance and credit products between October 2023 and August 2024 in Report 795 Design and distribution obligations: Compliance with the reasonable steps obligation (REP 795)

ASIC’s review revealed:

• many issuers had limited due diligence arrangements to assess and monitor third party distributors;
• some issuers of high-risk products were relying on broad search terms in online marketing;  
• many issuers used poor quality consumer questionnaires; and 
• only a few issuers monitored consumer outcomes and product performance.

REP 795 recommends issuers improve distribution practices regarding the selection and supervision of distributors, training staff, marketing materials, consumer questionnaires and information and monitoring outcomes.

ASIC also released minor updates to Regulatory Guide 274 Product design and distribution obligations (RG 274) to provide greater clarity around ASIC’s guidance on the appropriateness requirement for target market determinations (TMDs).  

ASIC said the changes to RG 274 will not require product issuers to update their TMDs and that DDO compliance remains a key focus.

ASIC releases enforcement and regulatory update, intends to target misconduct in banking and superannuation sectors

On 9 September, ASIC released its Report 794 ASIC enforcement and regulatory update: January to June 2024, which sets out recent outcomes in enforcement and regulation. In the first half of the year, ASIC was successful in 95% of its civil and criminal prosecutions, with $32.2 million in civil penalties and nine criminal convictions. ASIC also launched 63 new investigations, commenced 12 new civil proceedings and completed 550 surveillances throughout the period.

APRA consults on minor updates to the prudential framework for ADIs, insurers and RSE licensees

On 6 September, APRA released for consultation several minor updates to the prudential framework for authorised deposit-taking institutions, general, life and private health insurers and registrable superannuation entity licensees. This is part of APRA’s minor framework update process, intended to ensure technical and clarifying changes to the prudential framework can be made in a timely manner. 

APRA sought feedback on the proposed changes to prudential standards and guidance with. submissions to be provided by 4 October. 

The letter to ADIs, insurers and RSE Licensees, draft standards and draft guidance are available here.

Council of Financial Regulators releases Quarterly Statement for September 2024

On 4 September, the Council of Financial Regulators released its Quarterly Statement –  September 2024 after it held its regular quarterly meeting. Members noted that while global financial stability risks remain elevated and domestic economic conditions had been challenging for some time, the Australian financial system had continued to display a high level of resilience.