With the changes to the economic climate in Australia, the
Australian Securities & Investments Commission
(ASIC) and the Australian Prudential Regulation
Authority (APRA) have been kept very busy. Below
is a snapshot of some recent developments:
On 28 August 2008 ASIC and APRA released a newly updated
Unit Pricing – Guide to Good Practice for the
life insurance, superannuation and funds management industries. The
purpose of the joint guide is to assist product providers with
their unit pricing obligations, and provide good practice
principles and guidance in managing errors and compensation. One of
the key changes made to the guide is that scheme operators can
elect not to make payments to exited members for unit pricing
errors where the compensation due is less than AUD20. Further, if a
product provider applies a fixed dollar minimum then disclosure
must be made on its website and in the annual financial report for
the relevant fund. ASIC has stated "The amendment does not
affect the legal rights of members – this remains a
matter for scheme operators to assess. However, the regulators will
be satisfied if scheme operators adopt this amendment when
determining compensation to individual members." APRA and
ASIC reiterated that unit pricing issues can be complex and
providers need to remain vigilant in applying robust risk
management practices, as well as meeting their trustee and
responsible entity obligations.
ASIC has launched further action over the Westpoint collapse,
most recently on behalf of eight Westpoint companies against
accountancy firm KPMG in the Supreme Court of Victoria. The claims
are for negligent conduct by KPMG of audits of the financial
accounts of various Westpoint companies. The Westpoint Group
collapsed in 2006 with losses estimated to be in excess of AUD300
million. This is the next phase of ASIC's program to seek to
obtain compensation for the benefit of investors. Since November
2007, ASIC has commenced 16 civil actions seeking to recover funds
for investors including against the directors of the Westpoint
Group and financial planners. This is in addition to administrative
and criminal action taken against some of those involved.
ASIC has issued an update of Regulatory Guide 43 Financial
reports and audit relief, which explains how ASIC may exercise
its powers to grant relief from the financial reporting and audit
requirements under Part 2M of the Corporations Act (Cth)
APRA recently released its Half Yearly Insurance
Bulletin which is compiled from audited annual returns from
APRA-regulated general insurance companies for the financial year
ending 31 December 2007. APRA notes the industry's strong
performance and position "despite combined pressure from
global financial markets and natural events". Insurers
reported gross premium of AUD30.2 billion, an increase of AUD1.3
billion from the previous financial year.
The Corporations Amendment (Short Selling) Act (Cth)
2008 has now received Royal Assent and has commenced operation. The
Act bans naked short selling, expands ASIC's powers and
requires disclosure of permitted covered short selling.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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In the years following the global financial crisis of 2008 many Australian investors lost their life savings as financial products failed and the Australian Stock Exchange shed over 3,000 points.
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