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. Competing class actions (High Court): competing class actions are one of the notable issues which accompany the rise in litigation funding and correlated increase in class actions i.e. the asset class. Morabito
    identified that, of the 122 shareholder class actions filed in Australia since 1992, 59 were competing or related class actions based on the same or similar facts. This week in Wigmans v AMP Limited & Ors [2021] HCA 7, the High Court of Australia (by a 3:2 majority) dismissed an appeal against the decision of the New South Wales Court of Appeal. It upheld the ‘multi-factorial approach’ used by the Courts to determine which competing class actions need to be stayed, gave guidance to the lower courts as to how to choose which class action should go ahead and dismissed the argument that there is a presumption that the filing of a second, overlapping class action is an abuse of process. The multifactorial approach first developed by Beach J in McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd [2017] FCA 947 (and later adopted by Ward CJ in Eq in NSW) is used to determine which class action is to proceed based on a number of criteria, including: the experience and resources of the lawyers running each class action; the fees to be levied by each plaintiff law firm; the litigation funding agreements in each class action; the order in which the actions were commenced; the volume of group members signed up, as opposed to being caught as ‘open’ class action members; and, the possibility of a common fund order being made. While the High Court’s decision assists in this vexed area, there are, perhaps, some outstanding jurisprudential questions for those so inclined to consider them (in particular, the moral hazard of making precedential law based on the experience and resources of the advocates, which remains personally uncomfortable for me…).
  2. Breach reporting (Treasury): the Government has released a consultation paper on the proposed regulations for the new onerous AFSL breach reporting regime coming into play in October 2021. In short, they are lessening the threshold for reports to be made for some of the very common civil breaches e.g. failure to provide a credit guide. These regulations amend the Corporations Regulations 2001, the National Consumer Credit Protection Regulations 2010, the Corporations (Fees) Regulations 2001 and the National Consumer Credit Protection (Fees) Regulations 2010 to prescribe civil penalty provisions that are not taken to be significant (and therefore may not be reportable) under the relevant breach reporting regime if those provisions are contravened. The consultation paper also seeks to ensure certain breach reporting offences and civil penalty provisions are subject to an infringement notice. It is consistent with Karen Chester’s comments to the recent AFR Summit, where she detailed a shift in operating philosophy, which she dubbed “express investigations”. “We want to reward good performers with nudges, not grudges. We want to train ASIC’s radar on harmful misconduct, not on harm-free process breaches. Over time, this will deliver better outcomes for the economy, markets, business, shareholders and, ultimately, consumers and investors,” Chester told the Summit. Sensible as they are, the proposals do not go nearly far enough, however, and the system will remain draconian and give rise to a huge uptick in breach reporting. It is one of the reasons a good number of Regtech solutions are being created to respond to the increased demands (including by us, so get in touch if you want a demo!), and why I will be making a submission to the Government on this reform. Please do get in touch if you want to anonymously add to that submission.
  3. LIBOR (FCA): Goodbye LIBOR! The FCA has announced the dates that panel bank submissions for all LIBOR settings will cease, after which representative LIBOR rates will no longer be available. For those not familiar, the London Inter-bank Offered Rate is an interest-rate average calculated from estimates submitted by the leading banks in London. Each bank estimates what it would be charged were it to borrow from other banks. It forms a benchmark interest rate at which major global banks lend to one another in the international interbank market for short-term loans. Unfortunately, LIBOR has been subject to manipulation, scandal, and methodological critique, making it less credible today as a benchmark rate. (Major banks allegedly colluded to manipulate the LIBOR rates. They took traders’ requests into account and submitted artificially low LIBOR rates to keep them at their preferred levels. The intention behind the alleged malpractice was to bump up traders’ profits who were holding positions in LIBOR-based financial securities.) The Bank of England and the FCA have made it clear over a number of years that the lack of an active underlying market makes LIBOR unsustainable, and unsuitable for the widespread reliance that had been placed upon it. 31 December 2021 is the end date, in the case of all sterling, euro, Swiss franc and Japanese yen settings, and the 1-week and 2-month US dollar settings. 30 June 2023 is the date for all other US dollar settings.
  4. Climate guidance (APRA): APRA has indicated it will develop its first cross-industry prudential practice guide (PPG) on the management of climate-related financial risks. A PPG is not a legally binding regulation, but rather, is designed to be helpful guidance as to how regulated entities can fulfil their prudential obligations in relation to risk management when it comes to climate-related risks. (APRA’s other major initiative in addressing climate risk this year is the commencement of a series of Climate Vulnerability Assessments of major Australian banks.) The PPG is expected to be released for consultation in the first half of this year, and finalised before the end of 2021.
  5. ASIC’s crosshairs (ASIC): Deputy Chair Karen Chester gave a speech to the AFR Business Summit 2021 on Wednesday, 10 March 2021. Interestingly, she answered the question “What harms are in ASIC’s crosshairs today?”. The first: harm to consumers seeking fairly priced credit. The second is cyber risk. In this regard, Ms. Chester gave a very good summary of why the risk is a priority. First, systems under investment have increased exposures “ ‘System deficiency’ was the second most common root cause of breaches recently reported to us by the major banks” (28.9%!). Second, the risk landscape has become tougher. There are increasing bad actors seeking to take advantage. The third reason “much of this increase in vulnerabilities is occurring in systems that are ubiquitous; indeed, many are household names”. ASIC’s response to deal with cyber is as follows: “From these consultations we advanced our current cyber supervisory endeavours: raising awareness of cyber resilience for our entities; helping our regulated entities get prepared with their self‑assessment; and, taking decisive, deterrence-based enforcement action.” My top read for the week, the speech also covers ASIC recent enforcement action against super firms (20 investigations, and 8 court actions) and its plans for DDO (with particular reference to BNPL firms) later in the year.

Thought for the future: I really like APRA’s plan to issue a PPG for climate risk. We need more non binding forms of guidance from ASIC and APRA and AUSTRAC, to assist the regulated population in meeting increasing expectations placed on them. If you have the power to enforce expectations, then you have the duty to first adequately inform about them.



Liam Hennessy

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