A summary of regulatory requirements for statements of advice

A summary of regulatory requirements for statements of advice

Financial Services
As noted in our previous article, a statement of advice is the main document that records advice provided to retail clients. The advice process Individuals obtain information about financial products in a variety of ways and in a variety of settings. An individual may talk to friends and family, their lawyer, their accountant and others who they trust when considering a financial product. Where advice is sought from a financial advisor, a financial services guide (FSG) will typically be provided to a client in the first meeting between the client and advisor. A statement of advice (SoA) will then either set out the advice or record the advice that was given. If the statement of advice is not itself the means by which advice is provided, then it must be…
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An introduction to Financial Product Advice

An introduction to Financial Product Advice

Financial Services
Financial advice is regulated under the Corporations Act 2001 (Cth) as financial product advice. The provision of financial product advice is a financial service and a financial planner or adviser must hold an Australian Financial Services Licence (AFS Licence) or operate under an exemption to this licensing requirement. Financial advisors and AFS Licence holders are subject to general licensing obligations including relating to conduct and disclosure as well as additional obligations for financial advisers who provide financial product advice to retail clients. In this post, we introduce the types of advice given, the topics typically covered by advice and the regulatory framework. Types of financial product advice Under the Corporations Act there are two types of financial product advice. These are: personal advice which is defined as financial product advice…
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A deeper look at the AFS licence application process

A deeper look at the AFS licence application process

Financial Services
As we noted in our previous article there are five parts to form FS01. Below we describe these in more detail. Part A of the application requires you to provide details of the applicant as well as details of the person who will serve as a contact for the applicant during the application process. In part A you will also be asked questions about the financial services and products you would like to be authorised to provide and how your proposed business will operate. ASIC makes various references to the Corporations Act 2001. As noted in our previous article, applicants should ensure that they understand the applicable provisions of the Corporations Act and understand the controls that they will implement to ensure compliance. Who can apply for an AFS licence…
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How to obtain an AFSL

How to obtain an AFSL

Financial Services
Regulatory guides are published by ASIC to give guidance to regulated entities by explaining when and how ASIC will exercise specific powers, to explain how ASIC will interpret the law, to describe principles underlying ASIC’s approach, and to give practical guidance describing the steps of a process such as applying for a licence. If you want to understand how to obtain an AFSL, read on. Free Assessment of Whether you are ready Simply provide your details below to arrange an online interview to determine your readiness for an AFSL. We will contact you within 1 business day. Financial Services Regulatory guide one gives practical guidance to applicants for an Australian financial services licence (AFS licence). An AFS licence authorises you and your representatives to provide financial services to clients. Without…
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Webinar – Two New Codes for Banking and Lending

Consumer, Financial Services
In our recent webinar focusing on the finance industry, regulatory specialist Dr Drew Donnelly consider two new codes for banking and lending. This year has seen the finalisation of two distinct codes covering lending and banking businesses in Australia: The Banking Code of Conduct 2019 (Banking Code) and the Code of Lending Practice: AFIA Online Small Business Lenders (Lending Code). This webinar forms part of our series looking at the role of fintech, financial services, and the regulatory and compliance environments that surround them. If you would like to know more about our work supporting companies in the fintech and financial services sector, please contact us by clicking here. Below you can view a full transcription of the webinar along with the video. Recent Developments in Banking & Fintech Open…
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Unfair Contract Terms

Unfair Contract Terms

Financial Services
In March 2018, the Australian Securities and Investment Commission (ASIC) published REP 565 (found here: https://asic.gov.au/regulatory-resources/find-a-document/reports/rep-565-unfair-contract-terms-and-small-business-loans/), which outlines changes to small business loan contracts made by the big four banks to comply with the unfair contract term law. This report also provides guidance to the broader small business lending industry. On Friday, ASIC announced that Prospa Advance Pty Ltd (Prospa) had changed the terms of its small business loan contract to address potential non-compliance with the unfair contract terms provisions of the ASIC Act. Changes agreed Prospa agreed to make the following changes: to the early repayment clause so that borrowers are able to repay the loan early without Prospa’s consent. Further, removing Prospa’s absolute discretion whether or not to provide a discount for prepayment. to the unilateral variation clause…
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New ASIC Guidance for the Fund Management Industry – Push on Compliance

Financial Services
The Australian Securities & Investments Commission (ASIC) has just released a batch of guidance for fund management in Australia.[1] In today’s update we offer a quick breakdown of the seven guidance documents. The seven guidance documents square the existing regulatory framework under the Corporations Act 2001 with the new ‘Asia Region Funds Passport’.[2] This is a multilaterally agreed framework for the cross-border marketing of managed funds across the Asia Region. Our take — compliance is everything. The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry demonstrated that in spite of massive institutional compliance departments, and huge spends, a ‘compliance culture’ is non-existent in some businesses. [3] With deliberate attempts of senior management in some businesses to hide wrongdoing from ASIC it is fair to say that…
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How do I work out my compliance spend?

AU Energy Compliance, Financial Services, NZ Energy Compliance
In the just released final report of the Australian Competition & Consumer Commission (ACCC) retail electricity pricing inquiry[1], energy retailers identified the rising cost of regulatory compliance as a major concern.[2] Furthermore, rising compliance costs are not just a challenge for the energy sector. In 2014 Deloitte estimated that the total cost of compliance for Australian businesses was $250 billion every year.[3] This raises the question; what kinds of things must I consider when calculating my compliance spend as an energy business in Australia? By Dr Drew Donnelly, Compliance Quarter. Compliance Costs in General Unfortunately, there are no publicised benchmarks for compliance spend for individual energy businesses. This is likely because, in part, compliance spend is often not captured by a distinct line in the budget. Even when a business…
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Consumer data right – speech by Rod Sims Chairman of the ACCC

AU Energy Compliance, Financial Services
The Australian Competition and Consumer Commission (ACCC) Chair Rod Sims has delivered a speech to the National Consumer Data Policy Research Centre on the consumer data right (CDR) and the digital platforms inquiry (DPI). The CDR will be rolled out first in the banking industry followed by the energy and telecommunications industries. Photo by jesse orrico on Unsplash By Anne Wardell, Regulatory Specialist, Compliance Quarter. Consumer data right (CDR) The consumer data right (CDR) was introduced by the government in November 2017. Following the Open Banking Review, the Treasurer announced that banking would be the first sector to which the CDR would apply. At the same time as the Final Report was released, the government released the Consumer Data Right Booklet. The Booklet contains the following useful summary: The ACCC will have the…
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