Keeping on top of the latest financial services regulatory & compliance trends?

Investing time in your professional development within a rapidly changing financial services industry is challenging. To meet that challenge, the Australian regulators weekly wrap is designed to keep you at forefront of your practice by quickly setting out the top 5 developments from the past week, analysis and practical considerations for the future.

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  1. Proxy advice (Treasury): proxy advice assists institutional shareholders e.g. super funds to make decisions on how to vote on matters put to shareholders for approval at company meetings. Proxy advisers thus have a large role to play in corporate governance in Australia and give our historically high degree of institutional share ownership, the Government is consulting on the adequacy of the current regulatory regime for proxy advice and developing reform options that would strengthen the transparency and accountability of proxy advice. The consultation paper, which closes for comments on 1 June, is available for comments here.
  2. Remuneration (APRA): APRA has commenced consultation on draft guidance to assist industry meet the requirements of APRA’s updated prudential standard on remuneration. The draft Prudential Practice Guide CPG 511 Remuneration sets out principles and examples of better practice to assist banks, insurers and superannuation licensees comply with prudential standard CPS 511 Remuneration, which will be finished in later 2021. The entire thrust of the new remuneration guide is on non-financial measure of performance, which are notoriously difficult to quantify. The draft prudential practice guide will assist entities comply with the new standard by: outlining examples of better practice in board oversight, including robust challenge and independent scrutiny; setting out frameworks for defining non-financial measures and determining material weight for use in calculating variable remuneration; and, setting out principles for reductions in variable remuneration where there have been poor risk outcomes. The closing date for submissions on the draft CPG 511 is 23 July.
  3. FCA AML action (UK): the UK FCA (our ASIC) has issued its first criminal prosecution against a bank under Money Laundering Regulations (MLRs). The prosecution is brought under the 2007 MLRs and allege an acceptance by the bank of a large sum in cash and other deposits without appropriate KYC and ongoing monitoring of the accounts for the purposes of preventing money laundering. Precisely, the regulator alleges NatWest “failed to adequately monitor and scrutinise” the deposit of £264m in cash in one corporate customer’s account between 2011 and 2016. Money laundering has been an an increasing focus of global regulators, and the FCA clearly wants to prove a point here. If there is a conviction, the fine can be unlimited and, as importantly, the reputational impact on the bank is meant to really hurt. It will be interesting to see if AUSTRAC follows suit.
  4. Debt firms (ASIC): the Government has introduced new laws that mean certain debt management services are now a “credit activity” for the purposes of the National Consumer Credit Protection Act 2009. From 1 July 2021, subject to transitional arrangements, providers of debt management services must hold an ACL with a new authorisation that covers debt management services. What constitutes a ‘debt management service’ is broad, and includes suggesting and/or helping a consumer to: apply for a change to a credit contract for which the consumer is a debtor; apply for a postponement of enforcement proceedings; or, make a complaint or claim to a credit provider, AFCA, ASIC or the Information Commissioner. Also captured is credit assistance management, such as suggesting and/or helping a consumer to apply for a change to information collected by a credit reporting body about a credit contract for which the consumer is a debtor. I personally think it is a welcome development; debt management firms has been associated with some fairly unscrupulous practices in recent years, and regulation will weed out the bad from the good.
  5. Insolvency reforms (Treasury): the Morrision Government is not done amending insolvency laws — thankfully — and has announced that it plans to: consult on how trusts are treated under insolvency law; review whether the insolvent trading safe-harbour provisions remain fit for purpose, and consult on improving schemes of arrangement processes to better support businesses, including by introducing a moratorium on creditor enforcement while schemes are being negotiated. (The stat demand threshold will also be increased from $2,000 to $4,000.) Schemes of arrangement, which allow companies to restructure their debt arrangements, are well overdue in terms of focus, as they are no utilized as much as they could be due to the fact that creditors are in control of the process — to receive approval for any scheme, you need approved by a majority of your company’s creditors, at a creditors’ meeting. Switching to a more debtor friendly process, such as in the US, may see a greater take up of this option.

Thought for the future: AUSTRAC has just released a suite of educational resources, with real-life examples, on how to submit more effective suspicious matter reports . The new resources include a reference guide and checklist, and feature guidance on how to write succinct, accurate and clear grounds for suspicion. I think these are great resources — my top read for the week!



Liam Hennessy

AU financial services lawyer in compliance, regulatory & disputes. Email sign-up: and LinkedIn: