Australian regulators weekly wrap — Monday, 22 August 2022

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.

Never miss an update by signing up to receive emails here or by following me on LinkedIn here. You can also access past editions of the Australian regulators weekly wrap by clicking here.

1. AG Priorities (Government): the meeting of the Fed and State AGs has occurred with them setting out their common reform priorities. Not much from a financial services regulatory perspective. They continue to focus on defamation, access to digital records upon death / incapacitation and national register for enduring POAs.
2. Unfair contracts (ACCC): The Federal Court has declared that 38 contract terms used in contracts entered into by Fujifilm Business Innovation Australia or Fujifilm Leasing Australia (together, Fuji) with many thousands of small businesses are unfair, following court action by the ACCC. The types of terms which have been declared unfair and void include the following: 1) Automatic renewal terms: permit Fujifilm to renew the contract for a further period unless customers cancel the contract a certain number of days before the end of the contract term; 2) Disproportionate termination terms: allows Fujifilm to terminate the contract in a significantly wider range of circumstances than those which allow the customer to terminate the contract, if any; 3) Liability limitation terms: limit Fujifilm’s liability or require the customer to indemnify Fujifilm without corresponding rights for the customer; 4) Termination payment terms: require customers to pay extensive exit fees to Fujifilm in the event the contract is terminated, including certain charges which Fujifilm can set unilaterally; 5) Unfair payment terms: require customers to pay Fujifilm for software licensed pursuant to the agreement irrespective of whether Fujifilm has delivered the software and, when goods are purchased, to pay the purchase price prior to delivery; and, 6) Unilateral variation terms: permit Fujifilm to unilaterally vary some terms of the contract including the charges and terms contained in documents other than the signed contract. You can read the case here.
3. Old COld (AFSL): ASIC has cancelled the Australian financial services licence of Old Cold Gold Pty Ltd. The licence was cancelled on the basis that Old Cold Gold failed to maintain external dispute resolution membership with the AFCA and failed to lodge the profit and loss statement and balance sheet for the financial year ended 30 June 2021. Sharp stuff, and getting sharper from ASIC in the licensing space!
4. Statistics reporting (APRA): APRA has released updated FAQs on the Economic and Financial Statistics. APRA has released two updated frequently asked questions on the Reporting Form ARF 730.1 ABS/RBA Fees Charged of the Economic and Financial Statistics collection. The updated FAQs provide guidance to ADIs on the data reported on ARF 730.1 regarding interchange payments and housing loan cashback offers. Quite helpful, and concise answers, for what is quite a complicated area! You can read about the FAQs here.
5. BNPL (FCA): The UK FCA has warned firms that offer Buy Now Pay Later products that although some agreements are unregulated the financial promotions of all BNPL products must comply with the financial promotion rules. Authorised firms selling unregulated or exempt BNPL products must comply with the relevant rules unless an exemption applies. This includes that their BNPL financial promotions must be clear, fair and not misleading. For example, adverts emphasising the benefits of BNPL products without fair and prominent warnings of any risks to customers, such as: the risk of taking on debt that customers cannot afford to repay; the consequences of missed payments; any other adverse consequences such as the impact on the customer’s credit file; and, information about when charges become payable. I have always had a lot of respect for the FCA, and the fact that it does blanketly advocate licensing as the means for regulation of all products (like BNPL), but equally doesn’t shy away from regulating them with the proportionate attentuated regimes it does apply i.e. the financial promotion rules (a bit like DDO here) is to its credit. Worth noting from a comparative perspective for BNPL firms here now.

Thought for the future: do we need a CASSPr license for crypto? Can we modify the DDO / PIP regime, and add some rules around custody?