Australia: Financial services monthly wrap up

The month of April 2019 has seen an increase in the powers and responsibilities of both ASIC and APRA, with the passing of the anticipated Design and Distribution Obligations and Product Intervention Powers legislation and the Improving Accountability and Member Outcomes in Superannuation legislation.

Furthermore, ASIC has reissued its guidance on the relief currently available to foreign financial service providers and published its findings on the crowd-sourced funding and marketplace lending sectors.

More information on these developments, as well as other industry news, is set out below.

New Design and Distribution Obligations and Product Intervention Powers passed

The new Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2019 (Act) received Royal Assent on 5 April 2019. As a result, the Product Intervention Powers came into effect on 6 April 2019. The Design and Distribution Obligations have yet to come into force, and shall commence after a two-year transition period.

The Act amends the Corporations Act 2001 (Cth) and National Consumer Credit Protection Act 2009 (Cth) by imposing design and distribution obligations and providing ASIC with certain product intervention powers to strengthen consumer protection. In particular, this legislation:

  • imposes a design obligation, whereby a target market determination must be made with respect to certain financial products to ensure the product is appropriate for its intended market;
  • imposes distribution obligations to ensure that an offeror or distributor cannot deal or provide financial product advice with respect to a product unless a target market determination has been made; and
  • has enhanced and increased ASIC's intervention authority by giving ASIC proactive powers to issue a 'product intervention order' if ASIC is satisfied that there may be significant detriment for the retail client.

A copy of the legislation as passed is available here.

ASIC re-issues Information Sheet 157 'Foreign financial services providers – practical guidance'

On 3 April 2019, ASIC re-issued Information Sheet 157 'Foreign financial service providers – practical guidance', which sets out the relief currently in place for certain foreign financial service providers to provide financial services to wholesale clients in Australia.

In particular, the information sheet clarifies the applicable fees for notifying ASIC that this relief is being relied upon and additional details on the relevant documents that must be provided to ASIC.

We note that this relief is still due to expire in September 2019.

ASIC's media release and updated Information Sheet 157 can be found here.

APRA issues information paper on superannuation prudential framework

On 30 April 2019, APRA released an information paper in relation to its review of the superannuation prudential framework. APRA has examined the 2013 prudential framework to assess whether it is meeting its objective, resulted in any unintended consequences and continues to remain fit for purpose going forward.

APRA found that the prudential framework has resulted in improved practices across the industry and that the original objectives were largely being met, however, APRA also identified specific areas where enhancements to the frameworks will be considered, including governance, conflicts of interest and risk management.

The Information Paper 'Review of APRA's 2013 superannuation prudential framework' can be accessed here.

APRA's new Enforcement Approach

On 16 April 2019, APRA released details of its new enforcement approach, including how it intends to use its enforcement powers going forward. The approach is aimed at preventing and addressing serious prudential risks and to hold entities and individuals to account.

The stated principles that will guide APRA's enforcement decisions going forward will be risk-based, forward-looking, outcomes-based and deterrence-focussed.

APRA's Enforcement Approach can be accessed here.

ASIC's survey of marketplace lending providers

On 12 April 2019, ASIC released Report 617 Survey of marketplace lending providers after conducting a survey of 13 marketplace lending providers in the 2017-18 financial year. The Report found that marketplace lending (also known as peer-to-peer lending) has dramatically increased over the last year, with borrowings of $433 million during the year (which is up from $300 million for the FY 2016-17) and $518 million in outstanding loans (up from $327 million for the FY 2016-17).

A copy of the media release, Report 617 and infographic is available here.

ASIC's survey of Crowed-Sourced Funding Intermediaries

On 12 April 2019, ASIC published Report 616 that sets out its findings of a review of eight crowed-sourced funding (CSF) intermediaries from 29 September 2017 to 30 June 2018.

The Report sets out the key information and findings from the survey, with approximately $7.04 million raised in successful offers, 77.5% of which was from retail investors. ASIC stated that it will seek to encourage further innovation in this sector without compromising the protection of investors.

A copy of Report 616 and applicable infographic is available here.

ASIC gives warning to AFS Licensees that offer OTC derivatives

On 11 April 2019, ASIC issued a warning that Australian financial services (AFS) licensees that offer OTC derivatives to retail clients in some overseas jurisdictions may be providing unlicensed or unauthorised services in those particular jurisdictions. ASIC noted that regulators based in North America, China, Europe and Japan have restricted or prohibited the provision of certain OTC derivatives to retail clients.

ASIC stated it will consider whether breaching overseas law is consistent with obligations under Australian law to provide services 'efficiently, honestly and fairly' and whether AFS licensees may be making misleading or deceptive statements about the scope or application or effect of an AFS licence in providing such services.

More information is available here.

New Improving Accountability and Member Outcomes in Superannuation Legislation passed

The Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Act 2019 (Act) was registered on 10 April 2019. Among other items, the Act includes:

  • additional directions powers for APRA;
  • additional civil and criminal consequences for breaching certain provisions of the Superannuation Industry (Supervision) Act 1993;
  • changes to the portfolio holdings disclosure requirements;
  • the requirement to hold annual members' meetings for superannuation funds;
  • additional reporting standards;
  • prohibition on a trustee or its associates using goods or services to influence employers (as recommended in the Royal Commission's final report); and
  • the introduction an annual outcomes assessment.

The new Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Act 2019 is available here.

In response to the passage of this legislation, APRA commenced a four-week consultation period on an updated draft prudential standard that would require all registrable superannuation entities (RSE) licensees to annually assess the outcomes they are providing for their members. APRA Prudential Standard SPS 515 Strategic Planning and Member Outcomes was released in December 2018. However, APRA is proposing revisions to the draft standard to clarify how the new legislated outcomes assessment interacts with APRA requirements.

More information on the prudential standard can be found here.

Joint letter on superannuation fees published by ASIC and APRA

APRA and ASIC published a joint letter on 10 April 2019 to all RSE licensees to reinforce the importance of ensuring fees deducted from members' superannuation account are done so in accordance with their best interests and with appropriate oversight.

The regulators stated that they expect all trustees to be reviewing their governance arrangements in relation to these fees and that to the extent that areas for improvement are identified, these should be addressed in a timely manner. The regulators expect that these reviews will be substantially completed by 30 June 2019.

The joint letter issued by APRA and ASIC is available here.

ASIC's enforcement update from July to December 2018

On 9 April 2019, ASIC released its biannual report reviewing its enforcement objectives, actions and outcomes for the period of 1 July 2018 to 31 December 2018 (Report 615). In the report ASIC stated that its message to corporate Australia going forward is that ASIC is focused on enforcement. Further, ASIC sets out its particular enforcement focuses in relation to each of corporate governance, financial services, market integrity and small business. Unsurprisingly, ASIC's stated focuses include those identified in the recent Royal Commission including misconduct by AFS licensees, related party transactions and poor corporate governance.

The summary of enforcement outcomes for the second half of 2018 includes 9 individuals charged in criminal proceedings, $12.7 million in civil penalties imposed by the courts, 72 people removed or restricted from providing financial services or credit, 28 individuals disqualified or removed from directing companies, 9 enforceable undertakings entered into and 57 investigations completed out of 75 commenced.

A copy of the media release and Report 615 is available here.

ASIC extends temporary disclosure-related relief for product dashboards

On 8 April 2019, ASIC amended ASIC Class Orders [CO 14/443] and [CO 13/1534] to further delay the commencement of certain product dashboard requirements from 1 July 2019 to 1 July 2023 for choice superannuation products. The deferral also applies to the requirement to include product dashboard information in periodic statements.

A copy of ASIC's media release and the amending instrument is available here.

ASIC and UK Financial Conduct Authority's post-Brexit co-operation

On 8 April 2019, ASIC and the UK's Financial Conduct Authority (FCA) announced that two Memoranda of Understanding (MoUs) had been agreed to ensure continuity with respect to repositories and alternative investments funds once the UK leaves the European Union.

The MoUs ensure that ASIC may continue to have access to data on derivatives contracts held in UK trade repositories and ensure that ASIC and FCA can continue to work together to ensure that alternative investment fund managers and alternative investment funds continue to operate on a cross-border basis and are properly supervised in the UK and Australia.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions