Financial Services in Focus – Issue 92

ASIC remakes five ‘sunsetting’ class orders for managed funds

On 27 March, ASIC announced it has remade the following five class orders for managed funds set to expire (‘sunset’) on 1 April 2024:

• [CO 13/1200] – Periodic statements relief for AQUA quoted and listed managed investment scheme managed investment scheme issuer;
• [CO 13/1406] – Land holding for primary production schemes;
• [CO 13/1409] – Holding assets: standards for responsible entities;
• [CO 13/1410] – Holding assets: standards for providers of custodial and depository services; and
• [CO 13/1621] – Exemption and declaration for the operation of mFund.

The new legislative instruments replacing these class orders are:

• ASIC Corporations (Periodic Statement Relief for Quoted Securities) Instrument 2024/14;
• ASIC Corporations (Land Holding for Primary Production Schemes) Instrument 2024/15;
• ASIC Corporations (Asset Holding Standards for Responsible Entities) Instrument 2024/16;
• ASIC Corporations (Custody Standards for Providers of Custodial and Depository Services) Instrument 2024/17; and
• ASIC Corporations (mFund) Instrument 2024/18.

The new instruments expire on 1 April 2029, apart from ASIC Corporations (Land Holding for Primary Production Schemes) Instrument 2024/15, which sunsets on 1 October 2024.

On 27 March, APRA announced it will publish new data on how members’ funds are being spent and invested by trustees.

The new expenditure data, to be published from August 2024, will provide details on:

• the breakdown of expenses for the whole industry, and for each fund, by more detailed categories including administration, advice, member services, marketing, trustee board (including director remuneration) and other corporate overheads (such as travel and entertainment); and

• recipients of payments made by each fund to industrial bodies and related parties, relating to promotion, marketing or sponsorship expenses and any political donations.

Federal Court decides first UCT regime case for insurance contracts

On 22 March, the Federal Court handed down its first decision concerning the application of the unfair contract terms regime to insurance contracts. The Federal Court found a term requiring policy holders to notify Auto & General Insurance Company Limited of any changes to their home and contents is not unfair.

For more information, see our earlier article.

On 19 April, ASIC appealed the Federal Court’s decision.

APRA releases minor updates to the prudential framework for insurers

On 4 April, APRA released for consultation a number of minor proposed updates to the prudential framework for general, life and private health insurers.

The proposed amendments are primarily technical clarifications and do not present any material change in policy settings.

The deadline for providing submissions is 3 May.

Treasury introduces first tranche of legislation to deliver its financial advice package of reforms

On 27 March, Treasury announced it has introduced the first tranche of legislation to deliver its financial advice package of reforms.

The Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 implements reforms the government considers reduce unnecessary red tape, which adds to the time and cost of preparing financial advice and streamlines the delivery of financial advice.

It is also intended the rules for conflicted remuneration will be simplified by making it clear benefits paid by clients, including from their superannuation accounts, are not considered conflicted remuneration.

Further legislation will be developed to implement the remaining elements of the Delivering Better Financial Outcomes package in 2024.

ASIC reaffirms ongoing registration obligation for financial advisers

On 22 March, ASIC reminded AFS licensees and relevant providers of the importance of complying with the registration obligation on an ongoing basis.

Both AFS licensees and relevant providers should ensure they understand the circumstances where new registration is required. AFS licensees must register their relevant providers:

• after they authorise and appoint an adviser to the Financial Advisers Register;

• when they appoint an adviser who has moved from another AFS licensee;

• when an adviser changes roles from a ‘provisional relevant provider’ to a ‘relevant provider’; and

• when an adviser is dually authorised, and the adviser’s authorisation with their registering AFS licensee ceases.

Unregistered relevant providers who provide personal advice to retail clients relating to relevant financial products, together with their AFS licensee(s), will be in breach of the law and face potential regulatory action

APRA releases minor updates to the prudential framework for ADIs

On 4 April, APRA released for consultation several minor proposed updates to the prudential framework for authorised deposit-taking institutions.

The proposed amendments are primarily technical clarifications and do not present any material change in policy settings.

The deadline for providing submissions is 3 May.

ASIC adopts no-action position on financial reporting obligations of special purpose financing subsidiaries and their guarantors

On 23 April, ASIC announced it has adopted a no-action position in response to stakeholder feedback regarding the financial reporting obligations of special purpose financing subsidiaries or other wholly-owned subsidiaries. These subsidiaries issue debentures to sophisticated or professional investors and their guarantors that may have been relying on relief under ASIC Corporations (Wholly-Owned Companies) Instrument 2016/785 (ASIC Instrument 2016/785).

Under ASIC Instrument 2016/785, certain wholly-owned companies may be relieved from financial reporting obligations under Chapter 2M of the Corporations Act 2001, where they enter into a deed of cross guarantee with their holding entity and meet certain other conditions. Wholly-owned companies that are ‘borrowers in relation to debentures’, or ‘a guarantor of such a borrower’, are excluded from relief under ASIC Instrument 2016/785.

APRA updates ARS 701.0 for Economic and Financial Statistics collection

On 15 April, APRA announced it has updated Reporting Standard ARS 701.0 - ABS/RBA Definitions for the EFS Collection (ARS 701.0) and RPG 701.0 ABS/RBA Reporting Concepts for the EFS Collection.

Read more information about the updates to ARS 701.0 on the APRA website.

Treasury announces CSLR up and running

On 15 April, Treasury announced the Compensation Scheme of Last Resort (CSLR) is now beginning to process claims for compensation payments from eligible consumers.

ASIC consults on misconduct reporting guidance for external administrators and controllers

On 11 April, ASIC released a consultation paper on proposed updates to its regulatory guidance for external administrators and controllers when reporting and lodging statutory reports about alleged misconduct.

The proposed updates provide greater clarity on ASIC’s expectations of external administrators and controllers’ compliance with the reporting obligations and ASIC’s approach to the reports it receives.

The consultation is in response to feedback received from industry associations, professional bodies, as well as the Parliamentary Joint Committee’s recent recommendation on statutory reporting obligations. ASIC expects the proposed updates will provide improved guidance on reporting requirements, reducing unnecessary effort and expense.

ASIC invites feedback on its proposals to update Regulatory Guide 16 External administrators and controllers: Reporting of possible offences and misconduct (RG 16) by 6 June.

Treasury announces foreign investment fees legislation

On 8 April, Treasury announced the Foreign Acquisitions and Takeovers Fees Imposition Amendment Act 2024 received the Royal Assent. The Act amends the foreign investment law to:

• triple foreign investment fees for the acquisition of established dwellings;

• doubles vacancy fees for established and new residential dwellings for vacancy years commencing on or after 9 April; and

• makes other related amendments. 

The amendments commenced on 9 April. 

ASIC extends and amends parent entity financial statement and auditor independence instruments

On 27 March, ASIC announced it has extended the operation of the parent entity financial reporting and auditor independence legislative instruments.

ASIC Corporations (Parent Entity Financial Statements) Instrument 2021/195 and ASIC Corporations (Auditor Independence) Instrument 2021/75 (Principal Instruments) were due to expire on 1 April and 30 April respectively. ASIC has issued ASIC Corporations (Amendment) Instrument 2024/187 to extend the relief under the Primary Instruments for an additional five years.

ASIC has also amended the Principal Instruments to provide the same relief to registrable superannuation entities as currently granted to companies, registered managed investment schemes and other disclosing entities. This alignment ensures consistent treatment of registrable superannuation entities with other statutory audit clients.