Financial Services in Focus – Issue 10

Funds and financial products

ASIC updates guidance for trustees of wholesale equity schemes

On 4 September, ASIC released Regulatory Guide 192 Licensing: Wholesale equity schemes following public consultation.

ASIC states that the updates to the guidance reflect:

  • the changes made to the relief provided in ASIC Corporations (Wholesale Equity Scheme Trustees) Instrument 2017/849 to trustees of wholesale equity schemes that are operated by a manager holding an Australian financial services licence and
  • the amendments made to the financial requirements that may apply to these managers in ASIC Corporations (Amendment and Repeal) Instrument 2017/848.

Consumer credit

ASIC publishes review of reverse mortgage lending

On 28 August, ASIC released Report 586 Review of reverse mortgage lending in Australia as part of a review into reverse mortgage lending in Australia.

ASIC stated that the review found that that reverse mortgages are allowing older Australians to achieve their immediate financial goals – improving their lifestyles in retirement – but longer-term challenges exist.  In particular, the review found that borrowers typically had a poor understanding of the risks of their reverse mortgage, and broadly failed to consider how the loan could affect their possible future needs.

ASIC’s media release also contains an infographic.


APRA updates guidelines on the use of restricted words

On 20 August, APRA published Guidelines: Restricted Words under the Banking Act 1959 (Guidelines).

The Guidelines state that the Banking Act places restrictions on financial businesses using certain words and expressions related to banking, and that oly persons that have been granted approval by APRA can use the following words or expressions in Australia in relation to their financial business (unless an exception in the Banking Act applies):

  • ‘bank’, ‘banker’ and ‘banking’
  • ‘building society’, ‘credit union’, ‘credit society’ and ‘credit co-operative’
  • ‘authorised deposit-taking institution’ and
  • ‘ADI’ (except where these letters are used as part of another word).

In the Guidelines, APRA states that similar words and expressions, whether in English or other languages, are also restricted.  These restrictions apply to any ‘financial business’, meaning a business that includes or relates to the provision of financial services, whether or not in Australia.  There is no restriction on an ADI using any of the restricted words listed above.

ASIC publishes review on adviser-operated deposit accounts

On 9 August 2018, ASIC released Report 584 Improved protections for deposit accounts with third-party access following a review of deposit accounts that can be operated by a third-party, usually a financial adviser, stockbroker or accountant, on a customer’s behalf.

In particular, the report analyses the compliance measures and controls that banks should have in place to address the risk of fraud and other risks associated with third party access to customers’ money in these accounts.

ASIC stated that, following the review by ASIC, five Australian banks will improve their compliance measures and controls.

Other financial services regulation

ASIC reminds regulated organisations to submit information for industry funding purposes

On 23 August, ASIC announced that all organisations that it regulates (except for registered charities) are required to submit information to ASIC on the operation of their business before 27 September.

ASIC states that, to enable ASIC to calculate invoices, organisations must submit or confirm pre-populated business activity metric data on the operation of their business from the previous financial year, and that this will be done via the new online ASIC Regulatory Portal.

According to ASIC, a letter was sent from ASIC to each regulated company’s registered office address with instructions to complete the process.  The letter included a unique industry funding security key which is to be used to launch an online form.  ASIC’s website has related information if entities did not receive their letters or might otherwise require assistance with their security key.

For more information on the ASIC industry funding levy, please see our article.


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