Australian regulators weekly wrap — Monday, 30 December 2019

Thank you to everyone who has supported the ARWW in 2019. I hope that it has been useful — have a wonderful New Year and see you in 2020!

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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. PIP / DDO (ASIC): ASIC has issued a consultation paper CP 325 on the forthcoming guidance for the new financial product design and distribution obligations which come into effect on April 2021. It is a very useful paper summarising to whom the regime applies (page 13) and their obligations (pages 14–16) — my top read for the week! In terms of the guidance, key points are a strong emphasis on documenting the product governance framework to help firms demonstrate whether or not they are complying with their design and distribution obligations; an expectation that behavioral biases or “other factors that impede consumer outcomes” will not be exploited; a note that disclosure is not enough to protect consumers (which is a global theme); a principles-based approach to designing the content and form of a “target market determination” for a financial product subject to the regime; and some more detail on what broad considerations will form part of the “reasonable steps” to be taken in assuring that a financial product is being distributed in accordance with the target market determination e.g. risk, harm and mitigation (page 28). An issuer must notify ASIC of a significant dealing (except excluded dealings) in a financial product that is not consistent with the product’s target market determination — ASIC plans to provide guidance to issuers on the factors to consider in relation to this breach reporting aspect. To my mind the paper is a detailed and helpful resource to assist affected product issuers and distributors to get started on what may prove to be a lengthy regulatory reform project which will need to interlink with other projects e.g. BEAR. And against the backdrop of Cigno’s challenge to ASIC’s corresponding enforcement tool, the product intervention power.

Thought for the future: the UK Financial Conduct Authority is introducing a new regime next year which will force credit card providers to take a series of escalating steps to help people who are making low repayments on credit cards for a long period of time. Banks will have to explain to customers the benefits of increasing customer’s payments, and tell them about where to get debt help and advice after 18 months of persistent low level repayments. They will need to send them a reminder at 27 months and then offer them a way to repay their balance over a reasonable period after 36 months. Customers who fail to respond or cannot afford the increased repayment risk having their credit cards suspended. With ASIC’s increasing focus on responsible lending, perhaps this a measure we can expect to be raised in Australia soon?

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(These views are my own and do not constitute legal advice. Photo credit Tom Wheatley)

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