Tech, Lies and Litigation – ASIC Reads the Riot Act to the Financial Services Industry

Tech, Lies and Litigation – ASIC Reads the Riot Act to the Financial Services Industry

Financial Services
The Australian Securities and Investments Commission (ASIC) has taken more than a few big hits over the last month, as revelations of systemic risk and misconduct within the wealth management industry were aired publicly via the Royal Commission into Misconduct in the Banking, Financial Services and Superannuation Industry. It was time for a right of reply; and this week the Chair of ASIC, Mr James Shipton deployed just that in his keynote address at the Australian Council of Superannuation Investors Annual Conference. Mr Shipton made his position very plain – the actions of the wealth management industry had not only jeopardised our entire financial regulatory system but worse, had created a ‘trust deficit’ amongst the public. It was unequivocally a “moment”. Photo by Carlos Muza on Unsplash By Sarah Le Breton, Compliance Quarter…
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Increased penalties for white-collar crime are coming

Increased penalties for white-collar crime are coming

Financial Services
Last month, in the midst of hearings for the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (the Royal Commission), the Commonwealth Government (the Government)  announced increased penalties for corporate and financial misconduct.[1] These were not a direct response to the Royal Commission, but rather a response to the Australian Securities & Investments Commission (ASIC) Enforcement Review Taskforce (the taskforce).[2] Then on May 4, the Government announced a range of changes as part of its response to the Senate Economics References Committee (the Committee) inquiry into white-collar crime.[3] We take a look at the increased penalties for white-collar crime. Following on from our recent discussion of compliance in the corporate and financial services area (in particular see https://www.compliancequarter.com.au/six-questions-every-director-should-be-asking-about-compliance/ and https://www.compliancequarter.com.au/the-importance-of-culture-not-spend-in-compliance/), it is essential that all corporations and…
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Are Challenger Banks About To Succeed In Australia?

Are Challenger Banks About To Succeed In Australia?

Financial Services
Yesterday, APRA (Australian Prudential Regulation Authority) granted the first local digital licence to Sydney based volt bank. Volt and rival startup Xinja are aiming to establish challenger banks in Australia following in the steps of the United Kingdom where challenger banks have been trying to disrupt the large incumbent banks for some time now. By Stephen Findley, Relationship Manager, Compliance Quarter. Scan the executive boards of these new banks and you’ll see bankers and executives with UK experience or UK advisory behind them. The concept of building a digital bank, as in the common UK version, involves bolting together a host of providers that plug into the digital eco-system created by the bank. This typically allows challenger banks to operate a "proof of concept" as they look for customers and…
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The Importance of Culture, Not Spend in Compliance

The Importance of Culture, Not Spend in Compliance

Consumer, Financial Services
‘Actions speak louder than words’ - it’s an idiom that’s as old as time itself yet has never been as relevant to the world of compliance management as it stands today. This is a look at the importance of culture, not spend in compliance. By Sarah Le Breton, Compliance Quarter. As a former regulator and law enforcer, I have had firsthand experience in working with regulated entities when it comes to their compliance frameworks, particularly when there are a short-comings that need to be examined and addressed. In most instances when you issue notices to produce, you will invariably find an impressive set of formal documents that set out the way that the company is managing its compliance with the relevant statutory obligations – some clearly have better advisors than…
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Six Questions Every Director Should Be Asking About Compliance

AU Energy Compliance, Building and Construction, Consumer, Financial Services, NZ Energy Compliance
The obligation to ensure adherence to general and specific laws applying to your company’s operations is at the heart of your responsibilities as a company director – both under the Corporations Act 2001 (Cth) and at common law. The most recent set of hearings before the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission) are a sage reminder of the need for organisations (of all sizes) to reflect on how they are managing issues of governance and compliance within their business. You can follow some of our previous coverage of the Royal Commission here (https://www.compliancequarter.com.au/three-financial-services-compliance-lessons-from-the-royal-commission/#_ftn1). By The consequences of failing to meet your obligations as a director can potentially expose the organisation to actions by shareholders, along with civil penalty enforcement action by the…
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Recovering Costs in the California Retail Market: The Power Charge Indifference Adjustment

Financial Services
Why has the Australian Federal Government gone about developing the National Energy Guarantee (NEG) rather than adopting the Clean Energy Targets advocated in the Finkel Review?[1] By Dr Drew Donnelly, Compliance Quarter. According to the Federal Government, it is a matter of balance. Balancing emissions reduction goals with the need to maintain ongoing system reliability. Of course, perspectives will differ as to whether the NEG is getting that balance right[2], but what is undeniable is that renewable energy cannot prosper in a policy vacuum. Fostering renewable energy requires that all Governments make policy adjustments to other aspects of electricity regulation in order to maintain supply at a reasonable price. In California, regulatory tension between renewables and system reliability has reached a head with a submission earlier this month of joint…
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Three financial services compliance lessons from the Royal Commission

Three financial services compliance lessons from the Royal Commission

Financial Services
Today we continue to look at financial services compliance.“It’s not enough, is it… to have those policies and procedures in place? Financial advisers need to comply with them”[1]. So asked assisting counsel last week in the second round of hearings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (the Royal Commission). The fallout from the last week of hearings has been extensive, including the resignation of the AMP CEO and indications of impending law reform.[2]  We discussed some issues that arose in the first round of hearings here https://www.compliancequarter.com.au/royal-commission-round-one-the-home-loan-introducer-program/. [caption id="attachment_4184" align="aligncenter" width="640"] Photo by Rob Potter on Unsplash[/caption] This second round has focused on: charging fees for financial advice that is not provided or not provided in full (fees for no service); provision…
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What is a small, medium or large ADI? Latest BEAR Update

What is a small, medium or large ADI? Latest BEAR Update

Financial Services
The Banking Executive and Accountability Regime (BEAR) was passed into law in February of this year. We have talked about his law change several times before (see https://www.compliancequarter.com.au/1-july-2018-getting-prepared-banking-executive-accountability-regime-bear/). Today we look at the latest consultation from the Treasury consequent to that law change. This consultation looks at how the size of authorised deposit-taking institutions (ADIs) are to be defined for the purposes of BEAR. [caption id="attachment_4024" align="aligncenter" width="640"] Photo by Matthias Goetzke on Unsplash[/caption] By Dr Drew Donnelly, Compliance Quarter. BEAR Update - Legislative Instruments under the BEAR The BEAR, like many Acts of Parliament, sets out a range of matters to be determined by future determination of Ministers or regulatory bodies. The BEAR provides that the relevant Minister (I.e. the Treasurer), as well as the Australian Prudential Regulation Authority…
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ASIC releases updated guidance on client money

ASIC releases updated guidance on client money

Financial Services
ASIC has this week released updated guidance for Australian financial services (AFS) licensees that hold client money for trading in over-the-counter (OTC) derivatives. By Sara Le Breton, Compliance Quarter. ASIC Client Money Guidance Update The release of the updated guidance coincides with the start of ASIC's Client Money Reporting Rules 2017 (client money reporting rules) and other client money reforms on 4 April 2018 enacted under the Treasury Laws Amendment (2016 Measures No. 1) Act 2017 and the Corporations Amendment (Client Money) Regulations 2017. The updates can be found in ASIC Regulatory Guide 212 ‘Client money relating to dealing in OTC derivatives ‘ (RG 212) and INFO Sheet 226 ‘Complying with the ASIC Client Money Reporting Rules 2017’  which have both been updated to reflect the changes to the law.…
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Royal Commission, Round One: The home loan ‘Introducer’ program

Royal Commission, Round One: The home loan ‘Introducer’ program

Financial Services
This week the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (the Royal Commission), began round one of its public hearings (see https://financialservices.royalcommission.gov.au/public-hearings/Pages/transcripts.aspx). In today’s article we look briefly at one case study that has been discussed by the Royal Commission this week; the NAB ‘Introducer’ Program. [caption id="attachment_3706" align="aligncenter" width="640"] Photo by Martin Pegg on Unsplash[/caption] This case shows what can happen when effective compliance controls are not in place within an organisation. Background The Royal Commission was established on 14 December 2017, on the advice of the Commonwealth Government. It was initiated on the back of growing pressure for an independent and wider-ranging inquiry with full investigative powers. Following the release of background papers, submissions from the public and public hearings focused on specific…
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