Australian regulators weekly wrap — Monday, 29 May 2023

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. Systemc issues report (AFCA): AFCA has published the second edition of its bi-annual AFCA FY22–23 Systemic Issues Insights Report, which shares recent data and findings from a range of systemic issues cases across the industry, helping financial firms improve industry practice. AFCA conducted 106 detailed systemic issues investigations, ‘resolved’ 39 systemic issues, and facilitating 39M in consumer returns. Most interestingly, it also referred over 100 matters to other regulators e.g. ASIC, ATO, and OAIC. You can read the report here, and it is a salutary reminder of AFCA’s desire to wade into this area of the reg landscape.
2. BNPL (Treasury): the Government has said that BNPL services will be subjected to limited regulation under the Consumer Credit Protection Act 2009 (Cth)(NCCP). BNPL products will need to meet modified Responsible Lending Obligations under the NCCP to determine unsuitability, combined with a strengthened Industry Code. Assistant Minister Jones has mirrored the language of s. 47A of the NCCP, stating that “We must ensure that they operate honestly, efficiently, and fairly, in line with other regulated credit products”.
3. Super, LI and GI statistics (APRA): the prudential regulator has released annual statistics for the super industry, general insurers and life insurers. All are in the black with positive low single digit growth on assets and revenue; net profit for GIs is well up, as with LIs (at least for the last quarter). You can see the useful statistics here.
4. Post-legislative scrutiny (ALRC): the ALRC has released a great paper on post legislative scrutiny in Australia, following its earlier observation that a failure to revisit legislation can lead to redundant law accumulating in large, complex Acts. It has found that the mechanisms for parliamentary review of primary legislation after it is enacted are limited, and instead there is greater scrutiny applied to delegated legislation. The paper considers where the mechanisms can be enhanced so as to improve Commonwealth law-making more generally, borrowing from other jurisdictions great ideas (see Part 5 for this section if you want to skip to the end). My top read for the week!
5. Centurion (ASIC): the rule is that you need to use an AFSL within 6 months of it being obtained or you are at risk of losing it. The rule is somewhat laxly enforced though, at least in my experience. ASIC has, however, cancelled the AFSL of Centurion Custodian Funds Management Ltd, effective from 18 January 2023. On 20 January 2023, Centurion applied to the AAT seeking a review and stay of ASIC’s decision. The AAT refused the stay application on 4 May 2023 and the hearing for a substantial review of ASIC’s decision has been set for 10 July 2023. Centurion Custodian Funds Management Ltd has held AFS licence no. 286801 since 20 May 2005. ASIC alleges Centurion has not provided financial advice since the licence was granted.

Thought for the future: I do appreciate the UK’s ASIC, the FCA. With headlines like this, how can you not? “FCA finds young investors are more likely to have long-term goals in mind when dating than when investing”. The FCA is also partnering with “Celebs Go Dating’s” Anna Williamson to host an event for young investors — Swipe Left, Invest Right: How the Principles of Dating Can Be Applied to Investing to encourage them to adopt the same principles as they do when dating and become smarter investors .Together with utilising “love Island’ reality TV people to warn about Finfluencers, it is hard not to pay attention to the serious messages its delivering. Bravo!