Thinking | 30 April 2018
Financial Services in Focus – Issue 1
Funds and financial products
ASIC seeks consultation on fees-for-service draft legislation
On 11 April, the Government released draft legislation on the second phase of the ASIC industry funding model – the introduction of ASIC fees-for-service.
The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer, stated that the new fees-for-service regime is designed to ensure that the costs of regulation are borne by users rather than the Australian public and is intended to reflect ASIC’s actual costs for providing services.
Consultation in relation to the draft legislation closes on 24 April 2018, and on 1 May 2018 for regulation-related documents.
APRA releases insurance prudential standard determination
On 13 April 2018, APRA released its Prudential Standard GPS 410 Transfer and Amalgamation of Insurance Business for General Insurers. The instrument replicates the existing regulations which were mistakenly allowed to sunset on 1 October 2016.
The determination applies from 14 April 2018.
Government response to the ASIC Enforcement Review Taskforce Report
On 16 April, the Government released its response to the ASIC Enforcement Review Taskforce Report, which was provided to the Government in December 2017. The Government response to the Taskforce Report agrees, or agrees-in-principle, to all recommendations of the Taskforce.
The Government response to the Taskforce Report was released in conjunction with the Taskforce Report.
Government releases exposure draft on new regulations to protect client money in relation to OTC derivatives
On 17 April, the Government released exposure draft regulations to support and improve the powers of ASIC to enforce the new client money regime in relation to over-the-counter derivatives products which commenced on 4 April 2018.
The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer, stated that the new regulations would provide ASIC with alternatives to civil proceedings for breaches of the Client Money Reporting Rules 2017, including the ability to issue infringement notices and accept enforceable undertakings.
Consultation closes on 26 April 2018.
Government intends to increase civil and criminal penalties for corporate and financial misconduct
On 20 April 2018, the Treasurer, the Hon Scott Morrison, and the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer, stated the Government is intending to strengthen criminal and civil penalties for corporate misconduct and boosting the powers of ASIC to protect Australian consumers from corporate and financial misconduct.
ASIC Industry Funding Levy Amendments consultation
On 23 April, the Government released exposure draft regulations to make technical amendments to the levies in the industry funding framework to ensure they operate as intended.
The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer stated that industry funding increases transparency, makes industry more accountable for its behaviour and makes ASIC a stronger regulator.
Comments on the exposure draft regulations close 14 May 2018.
Regulations regarding Australian Financial Complaints Authority
On 24 April, the Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Regulations 2018 (Cth) was registered.
The Explanatory Statement to the regulations states that the regulations include amendments to ensure that requirements that apply to ASIC-approved external dispute resolution schemes or the Superannuation Complaints Tribunal are replaced with requirements that apply in relation to the Australian Financial Complaints Authority scheme and repeal provisions that have become redundant as a result of the transition to the new dispute resolution framework.
ASIC releases guidance on AFS licensing exemption for tax and BAS agents
On 26 April, ASIC updated its guidance for accountants who provide services in relation to SMSFs to cover the exemption from the Australian financial services licensing requirements for tax and BAS agents.
ASIC states that the guidance sets out some basic principles which tax and BAS agents can apply to understand whether their advice falls within the licensing exemption, and provides a few examples to illustrate how the exemption works.
Financial product advice
FASEA releases draft code of ethics for financial advisers
On 20 March, the Financial Adviser Standards and Ethics Authority Limited (FASEA) released a draft code of ethics for financials advisers. FASEA is seeking consultation on how the draft code will address consumer detriments in the financial advice area, how other standards relate to the fundamental standard that advice (or referral or other service) that a consumer gets from an adviser does not produce inappropriate personal advantage to the adviser, and the practical application of the code in a range of areas.
Consultation closes on 1 June 2018.
National Consumer Credit Protection Regulations amendments
On 23 April, the National Consumer Credit Protection Amendment (Credit Cards) Regulations 2018 (Cth) was registered.
Government released regulations to support ongoing reforms to improve consumer outcomes under credit card contracts.
The Explanatory Statement states that the regulations make consequential changes to the National Consumer Credit Protection Regulations 2010 (Cth) to support the Government’s reforms to the National Consumer Credit Protection Act 2009 (Cth) to improve consumer outcomes under credit card contracts.
Other financial services regulation
Government releases exposure draft legislation to relax the restriction on ownership of banks and insurers
On 16 April, the Government has released exposure draft legislation to relax the restriction on ownership of banks and insurers as well as the introduction of a new streamlined approval path under the Financial Sector (Shareholdings) Act 1998 (Cth) (FSSA).
The Treasurer, the Hon Scott Morrison, stated that the amendments will increase the general FSSA ownership cap from 15 to 20 percent, in line with the Foreign Acquisitions and Takeovers Act 1975 (Cth) and allow owners of domestically incorporated companies to hold more than 20 percent of an institution’s shares in certain circumstances.
Submissions are due by 4 May 2018.
AFSA proposes change to PPSR fees
As part of the Australian Government Charging Framework, the Australian Financial Security Authority (AFSA) has developed a Cost Recovery Implementation Statement (CRIS) to demonstrate the cost recovery model for PPSR activities, which is to apply from 1 July 2018.
Any changes to fees must be approved by the Attorney-General. If the proposed fees and charges are approved by the Attorney-General they will come into effect on 1 July 2018.
Comments are due by 4 May 2018.
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Financial Services in Focus is a fortnightly round-up of legal and regulatory developments in the financial services sector in Australia. Read more here.