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) 2001.
- 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.
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