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. CDR extension (Treasury): in January 2022, the Government announced that the Consumer Data Right (CDR) would expand to ‘Open Finance’ as the next sector to be assessed. A massive step for the financial services industry, phase 1 of Open Finance will include the assessment and designation of the non-bank lending sector, merchant acquiring services, and key datasets in the general insurance and superannuation sectors. Treasury has just released a consultation paper which invites feedback on the proposal to expand CDR to non-bank lending for the purpose of informing Treasury’s sectoral assessment report. A broad consultation paper, which does not have too much specifics beyond outlining the benefits of ‘open finance’, it is open for consultation under 12 April 2022.
  2. Financial advice review (Treasury): the Government is undertaking a review into the quality of financial advice. The review is designed to presents an opportunity to assess how the regulatory framework could deliver better outcomes for consumers. Amongst other things, the review will investigate: whether there are opportunities to streamline and simplify regulatory compliance to reduce costs and duplication; how to improve the clarity and availability of documents provided to consumers; and, whether parts of the regulatory framework have created unintended consequences. A report will be provided to the Government by 16 December 2022, and here’s hoping that it will contain some recommendations which help to rehabilitate a severely battered industry!
  3. CCIV (ASIC): ASIC has released a consultation paper seeking industry feedback on its proposed licensing requirements for corporate collective investment vehicles. The licensing requirements will come into effect on 1 July 2022 when the CCIV regime commences — you can learn more about CCIVs, the new challenger to MIS regime, in this article here. CP 360 contains proposals on a range of licensing-related matters, including how ASIC will: assess AFSL applications from corporate directors seeking to operate a CCIV; assess AFS licence applications from persons seeking to provide financial product advice on and/or deal in CCIV securities, and, administer the licensee obligations that will apply to CCIV corporate directors. Overall, the positions taken by ASICare sensible and seek to reduce the licensing burden. For example, AFS licensees will not have to apply to ASIC for a licence variation to provide financial product advice on and/or deal in CCIV securities if: they are licensed to provide financial product advice on and/or deal in securities, since their AFS licence already covers ‘securities’; and, they are licensed to provide financial product advice on and/or deal in ‘interests in managed investment schemes’, and consent to an ASIC initiated licence variation to include ‘securities in a CCIV’. Easily my top read for the week, submissions on CP 360 from close on 14 April 2022.!
  4. Reinsurance (APRA): APRA has released an updated prudential standard to manage risks associated with the growing use of offshore reinsurers by Australian life insurers due to commence from 1 July 2023. APRA now intends to amend LPS 117 to include limits on the recognition of eligible collateral, guarantees and letters of credit as risk mitigants in respect of APRA-approved affiliated offshore reinsurers. The revised LPS 117 includes a reduction in the minimum term for letters of credit to three years from five years. This minimum term must be met in order to be recognised as a risk mitigant for capital purposes.
  5. Market integrity rules (ASIC): ASIC has introduced new market integrity rules aimed at promoting the technological and operational resilience of securities and futures market operators and participants. The new technological and operational resilience rules that apply from 10 March 2023 relate to: change management; outsourcing; information security; business continuity planning; governance and resourcing, and trading controls (market operators only).

Thought for the future: the proposed review of trailing commissions for mortgage brokers that came after the Hayne Royal Commission will not go ahead, as the government said there was no systemic evidence of broker misconduct or consumer detriment stemming from the current remuneration structure. A good move in my view — Commissioner Hayne had some good, some neutral and some bad ideas and the sooner policymakers accept that the better…

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Liam Hennessy

Liam Hennessy

AU financial services lawyer in compliance, regulatory & disputes. Email sign-up: http://eepurl.com/gG9Kk1 and LinkedIn: https://www.linkedin.com/in/lthennessy/