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.
- FAR (Parliament): an unedifying week in Parliament, as Labor agreed with the Greens last minute to include $1M fines for Accountable Persons in the FAR legislation without any consultations. Only the great lobbying work of Anna Bligh and the ABA caused the Government to rethink its deal with the Greens — the legislation has now been pulled from the Parliamentary agenda. It is bloody-minded and excessive, as are the fines for ancillary liability, given the principles-based breadth of the regime, lack of guidance/case law and regulatory hawkishness now. Pure politics, and bad policymaking which impacts people’s lives - both the Green and Labor should be ashamed of the debacle.
- Crypto assest reporting framework (OECD): the Organisation for Economic Co-operation and Development has published its report on the Crypto-Asset Reporting Framework (CARF) and Amendments to the Common Reporting Standard (CRS) after undertaking public consultation. The CARF has been developed as a global framework providing for the automatic exchange of tax information on transactions involving crypto assets. The new rules are very broad — they should capture more participants than are current held under CRS. The definition of Crypto-Assets targets those assets that can be held and transferred in a decentralised manner, without the intervention of traditional financial intermediaries, including certain stablecoins, derivatives issued in the form of a Crypto-Asset and certain non-fungible tokens. Entities or individuals that provide services effecting exchange transactions in Crypto-Assets as a business for or on behalf of customers would be considered “Reporting Crypto-Asset Service Providers” under the CARF, and need to report transactions and conduct due diligence on users under CARF (it is similar to FATCA / CRS in this regard). The start date is unknown — Treasury needs to implement these changes in legislation, and likely within 2023.
- Buy now, pay later (Treasury): BNPL products are not regulated under the Credit Act because they fall under the exemptions available to certain types of credit in the National Credit Code. Long the bete noir of consumer advocacy groups, who argue that BNPL’s exclusion from responsible lending obligations can lead to poor consumer outcomes, the Government has released an options paper seeking views on three broad options that aim to provide a regulatory foundation for BNPL. The three options are: 1) strengthening the BNPL Industry Code plus an affordability test; 2) limited BNPL regulation under the Credit Act, including licensing and scalable unsuitability test; 3) regulation of BNPL under the Credit Act. I suspect the middle road will be taken, but in any case it looks like there will be some form of credit checks which will apply to BNPL sector in the near future.
- Breach reporting (ASIC): ASIC has released a breach reporting API for submitting reports under the regime. The API provides a machine-to-machine interface solution to submit these notifications. The API will make it easier for high-volume users by removing the need to manually input information into ASIC’s form. You can read the specifications here, which I am excited about for personal reasons given the software we created for this purpose (see the Gadens breach manager here).
Thought for the future: “Laws are like sausages, it is better not to see them being made” Otto von Bismarck (1815–1898).