Financial Services in Focus – Issue 4

Funds and financial products

Client Money Reporting Rules Enforcement Powers Regulations registered

On 8 June the Corporations Amendment (Client Money Reporting Rules Enforcement Powers) Regulations 2018 (Cth) was registered.

These regulations authorise alternative enforcement mechanisms for the ASIC Client Money Reporting Rules 2017. According to the Explanatory Statement, the regulations essentially mirror the alternatives to civil proceedings set out by the market integrity rules and the derivative transaction and derivative trade repository rules, to facilitate ASIC’s effective enforcement of its client money reporting rules.

ASIC extends shorter PDS regime class order

On 4 June ASIC announced it extended [CO 12/749] Relief from the Shorter PDS regime to 30 June 2022.

CO 12/749, as extended by ASIC Corporations (Amendment) Instrument 2018/473 provides relief to exclude multifunds, superannuation platforms and hedge funds from the disclosure requirements of the shorter PDS regime under Part 7.9 of the Corporations Regulations.

ASIC consults on foreign financial services providers relief proposals

On 1 June ASIC released a consultation paper, Consultation Paper 301 Foreign financial services providers (CP 301) proposing a modified licensing regime for foreign financial service providers carrying on a financial services business in Australia with wholesale clients.

ASIC states that the proposals in CP 301 follow ASIC’s review of the regulatory settings behind its foreign providers relief and that its review identified some supervisory and regulatory concerns about the operation of the relief.

We provide an analysis and commentary on CP 301 in our article.

ASIC invites submissions on CP 301 by 31 July.

ASIC gives disclosure relief during transition to AFCA

On 31 May ASIC announced that it will give financial firms, including superannuation trustees, transitional relief until 1 July 2019 to allow them time to update mandatory disclosure documents and periodic statements with the contact details of the Australian Financial Complaints Authority.

The relief is set out in ASIC Corporations (AFCA transition) Instrument 2018/447 and ASIC Credit (AFCA transition) Instrument 2018/448.

ASIC Industry Funding Model amendment bills

On 24 May the Government introduced a number of bills to Parliament to amend the Corporations (Fees) Act 2001 (Cth), the National Consumer Credit Protection (Fees) Act 2009 (Cth), the Superannuation Auditor Registration Imposition Act 2012 (Cth) and the Superannuation Industry (Supervision) Act 1993 (Cth).

The Explanatory Memorandum in respect of the bills states that these bills will allow ASIC to better align its fees, by enabling ASIC to charge a cost reflective fee for the services it provides for a specific entity and implement the second and final phase of the Industry Funding Model for ASIC.

ASIC v Westpac case involving the BBSW rate

On 24 May Justice Beach of the Federal Court of Australia handed down its judgment in respect of Westpac’s involvement in setting the Bank Bill Swap Reference rate (BBSW) on certain occasions (see Australian Securities and Investments Commission v Westpac Banking Corporation (No 2) [2018] FCA 751).

The Court held that ASIC did not made out its case against Westpac under sections 1041A and 1041B of the Corporations Act concerning market manipulation or market rigging or in respect of its other claims, but held that Westpac engaged in unconscionable conduct under section 12CC of the ASIC Act (as in force prior to 1 January 2012) on four occasions and contravened certain paragraphs of section 912A of the Corporations Act.  ASIC’s issued a media release on the outcome.

In a lengthy judgment, the Court provides a useful legal analysis of provisions relating to market manipulation, misleading or deceptive conduct and unconscionable conduct under both the Corporations Act and the ASIC Act, as well as the general obligation of AFS licensees under section 912A of the Corporations Act.

Financial markets

ASIC amends legislative instruments to accommodate ETFs quoted and traded on Chi-X

On 30 May the ASIC Corporations (Amendment) Instrument 2018/3 was registered.  According to the Explanatory Statement, the purpose of the amending instrument is to extend existing relief in a number of ASIC instruments to facilitate the quotation and trading of exchange traded funds (ETFs) on the market operated by Chi-X Australia Pty Ltd (Chi-X). The existing relief currently applies only to the market operated by ASX Limited (ASX), and the amending instruments seeks (among other things) to make the terminology “market neutral” to ensure that it applies effectively to both the ASX and Chi-X market.

The instrument amends ASIC Class Order [CO 10/288], ASIC Class Order [CO 13/655], ASIC Class Order [C0 13/721] and ASIC Class Order [C0 13/1200].

ASIC Market Integrity Rules amendments

On 22 May the ASIC Market Integrity Rules (Securities Markets) Repeal Instrument 2018/401 was made which repeals the ASIC Market Integrity Rules (Securities Markets) Determination 2018/208.  The purpose of the instrument is to repeal the Determination, which is rendered redundant by the amendment instrument.

Anti-money laundering

AUSTRAC announces RegTech showcase

On 22 May AUSTRAC has announced that on Tuesday 26 June AUSTRAC will bring together RegTechs, startups and reporting entities for a half day event to showcase innovative ideas to tackle money laundering and terrorism financing.

AUSTRAC states that the event demonstrates AUSTRAC’s support for innovation and the application of emerging technologies in this sector.

Interested parties can register for the event here.

Consumer credit

Government consults on Mandatory Comprehensive Credit Reporting Regulations

On 4 June the Treasury states the Government is seeking stakeholder views on the exposure draft of the National Consumer Credit Protection Amendment (Mandatory Comprehensive Credit Reporting) Regulations 2018 (Cth), which propose to give effect to a number of provisions within the National Consumer Credit Protection Amendment (Mandatory Comprehensive Credit Reporting) Bill 2018 (Bill).

The Treasurer, the Hon Scott Morrison, stated that the Bill will require the major banks to supply comprehensive credit information to credit reporting bodies from 1 July 2018.

Consultation closes on 13 June.

Other financial services regulation

Financial Sector (Collection of Data) Regulations remade

On 7 June the Financial Sector (Collection of Data) Regulations 2018 (Cth) (the Regulations) were made.  According to the Explanatory Statement to the Regulations, the purpose of the Regulations is to remake the Financial Sector (Collection of Data) Regulations 2008 prior to their ‘sunsetting’.  The Regulations remake the Financial Sector (Collection of Data) Regulations 2008 by updating the language and restructuring provisions to align with current drafting practices.

These changes do not change the substantive meaning or operation of the provisions.

The Regulations commence on 1 October 2018.

Reappointment of APRA Deputy Chair and proposed appointment of additional APRA Deputy Chair

On 30 May the Treasurer, the Hon Scott Morrison, announced the reappointment of Helen Rowell as Deputy Chair of APRA, and the intention to nominate John Lonsdale as an additional Deputy Chair of APRA pending Parliament’s passage of amendments to the APRA Act introduced on 24 May.

Government establishes new body to boost financial capacity across Australia

On 28 May the Government announced that it will establish a new body to boost the advancement of financial capability across Australia.

The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer, stated that the body will administer grants and improve capabilities amongst Australians of financial products and services, and that the body will manage and distribute community benefit payments that form part of the settlement between ASIC, ANZ and NAB relating to the manipulation of the Bank Bill Swap Rate.


Treasury releases consultation paper on economy-wide cash payment limit

On 23 May the Treasury released a consultation paper, Introducing an Economy-Wide Cash Payment Limit: Government response to the Black Economy Taskforce Final Report, which seeks views on the announcement of the Government as part of the 2018-19 Budget of an economy-wide cash payment limit of $10,000, applicable to payments made to businesses for goods and services from 1 July 2019.

The Treasury states that the consultation paper is seeking the views of stakeholders to identify further issues for consideration in implementing this measure.  This includes views on reporting obligations, integrity measures and whether any exemptions apply.

Responses are due by 24 June.


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