16 April 2019

Financial Services in Focus – Issue 23

Funds and financial products

ASIC survey of marketplace lending providers

On 12 April, ASIC released Report 617 Survey of marketplace lending providers: 2017–18 and an accompanying infographic.

ASIC states that the survey covers marketplace lending activities that are regulated by ASIC as managed investment schemes and looks at providers offering financial products or services through a ‘scheme of arrangement’ that matches loan requests against offers to invest.  This report explains how ASIC conducted the 2017–18 survey, findings from the 2017–18 survey, and ASIC’s next steps.

ASIC survey of crowd-sourced funding intermediaries

On 12 April, ASIC released Report 616 Survey of crowd-sourced funding intermediaries: 2017–18 and an accompanying infographic.

ASIC states that the survey covers the first six months of CSF activity in Australia – from 11 January to 30 June 2018 – and that during this period complete CSF offers raised a net total of approximately $7.04 million.

ASIC warns that some AFS licensees may be breaking overseas laws

On 11 April, ASIC warned that AFS licensees that offer OTC derivatives to retail investors located in some overseas jurisdictions may be providing unlicensed or unauthorised services in those jurisdictions.

ASIC states that AFS licensees are ‘on notice’ that in addition to overseas consequences of potential breaches of overseas law, ASIC will consider whether breaching overseas law is consistent with obligations under Australian law to provide services ‘efficiently, honestly and fairly’.  Further, ASIC will also consider whether AFS licensee are making misleading or deceptive statements about the scope or application or effect of an AFS licence.

Design and Distribution Obligations and Product Intervention Powers legislation has been passed

On 5 April the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2019 has passed and received Royal Assent.

The Product Intervention Powers commenced on 6 April.  The Design and Distribution Obligations commence on 6 April 2021.

ASIC welcomes the development and states that these reforms were recommended by the Financial System Inquiry in 2014 and represent a fundamental shift away from relying predominantly on disclosure to drive good consumer outcomes.

Further information, including about changes to the draft bill, is set out in our article.

Other financial services regulation

APRA and ASIC publish joint letter on superannuation fees

On 10 April, APRA and ASIC released a joint letter ‘to reinforce the importance of superannuation trustees undertaking appropriate oversight of fees and other charges being deducted from members’ superannuation accounts for payment to third parties such as financial advisers’.

In the letter, the regulators expect that trustees should conduct a review of the robustness of their existing governance and assurance arrangements for fees charged to members’ superannuation accounts, and to address any identified areas for improvement in a timely manner.  They expect these reviews to be substantially completed by 30 June 2019.

ASIC extends temporary disclosure-related relief for product dashboards

On 8 April, ASIC released an amendment instrument that amends ASIC Class Order [CO 13/1534] and ASIC Class Order [CO 14/443] dealing with disclosure obligations relating to choice product dashboards.

ASIC states that it has continued to defer the start date on which superannuation trustees must disclose a dashboard for choice superannuation products by amending the existing class order.  The amendments defer the commencement of relevant obligations until 1 July 2023, which ASIC says will allow further consideration by Government of the policy position.  ASIC will adjust or revoke the relief once policy positions in relation to dashboards are settled.

ASIC has also amended a related instrument (ASIC Class Order [CO 13/1534]), which concerns disclosure of dashboard information in a periodic statement.  ASIC states the amendment continues to defer the requirement to include a dashboard in a periodic statement by allowing superannuation trustees to include a website address for the dashboard instead.

Superannuation reform legislation implements two Royal Commission recommendations

On 5 April the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2019 received Royal Assent.

According to Treasurer Josh Frydenberg and Assistant Treasurer Stuart Robert, the legislation:

  • implements Recommendation 3.6 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (‘Royal Commission’) to ban superannuation funds from inducing employers;
  • implements Recommendation 3.7 of the Royal Commission to extend civil penalties to superannuation fund trustees, in addition to civil and criminal penalties to directors, for breach of their best interests duty;
  • bolsters APRA’s powers to take preventative or corrective action where they find that a superannuation fund is not acting in the best interests of members;
  • imposes stronger obligations on superannuation funds to meet members’ best interests via the new outcomes assessment;
  • makes superannuation funds more transparent and accountable for how they spend members’ money through new reporting of expenses, Annual Members’ Meetings and a portfolio holdings disclosure regime; and
  • strengthens APRA’s power over the authorisation process for default MySuper products.

APRA welcomes the passage of this legislation and states that the legislation significantly strengthens APRA’s ability to drive trustees towards improved outcomes for members and to address underperformance at an early stage.


    Fluent in Chinese | Mandarin - conversational

Eugene specialises in capital raising, funds management, financial services licensing and anti-money laundering law.

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Heather advises on all regulatory, compliance, investment, tax and contractual issues, as well as acting in connection with disputes, regulator actions, product development, fund mergers and restructurings, and other transactions...

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Anne is a leading superannuation and financial services lawyer with deep knowledge and understanding of the superannuation and financial services industry...

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  • Fluent in Hebrew -Conversational

Harry has represented a number of listed public companies, large private companies and government organisations...

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Adrian’s financial services law practice covers superannuation, managed funds, insurance, and financial advice...

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    Fluent in Arabic - Conversational

John has broad experience in financial services, funds management, blockchain, corporate and commercial law, with a particular emphasis on funds management related matters.

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Vince Battaglia is an experienced funds management and financial services practitioner.  He has worked in global and national law firms, as well as at ASIC.

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