Restrictions on payday loans and rent-to-buy schemes? New private members Bill

Restrictions on payday loans and rent-to-buy schemes? New private members Bill

Financial Services
Restrictions on payday loans and rent-to-buy schemes? On the 26 February, legislation was introduced to the Commonwealth House of Representatives with the aim of amending the National Consumer Credit Protection Act 2009; the National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2018 (henceforth, ‘the Bill’). Photo by Olu Eletu on Unsplash The stated goal of the Bill is to help “Australians get a better deal from Small Amount Credit Contracts (commonly known as payday loans) and consumer leases (known as rent-to-buy schemes)”.[1] Today we summarise the provisions contained in the Bill. Background In light of growing concern with exploitative lending practices, and recommendations from the Independent Review of the Small Amount Credit Contract (SACC) Laws (2015), the Commonwealth Government committed to passing legislative reform of payday loans…
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ASIC oversight of the Australian Financial Complaints Authority (AFCA): Consultation Open

ASIC oversight of the Australian Financial Complaints Authority (AFCA): Consultation Open

Financial Services
ASIC oversight of the Australian Financial Complaints Authority (AFCA): Consultation Open - On March 5 the Australian Securities & Investments Commission (ASIC) released a draft updated Regulatory Guide 139, Oversight of AFCA (updated RG139) for public consultation (see http://download.asic.gov.au/regulatory-resources/find-a-document/consultation-papers/cp-298-oversight-of-the-australian-financial-complaints-authority-update-to-rg-139/). Photo by rawpixel.com on Unsplash By Dr Drew Donnelly, Compliance Quarter.  In this update, we set out the key elements proposed to be included in the Regulatory Guide (the Guide) in connection with the establishment of the Australian Financial Complaints Authority (AFCA). ASIC invites submissions on the draft Guide by 6 April 2018. Background We last discussed the establishment of AFCA last year (https://www.compliancequarter.com.au/changes-australian-financial-complaints-authority/). Since then the legislation establishing AFCA has passed through the Commonwealth Parliament, becoming law on 14 February 2018. AFCA will be the new dispute resolution body for the financial sector.…
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ASIC’s New Product Intervention Power

ASIC’s New Product Intervention Power

Financial Services
Last time we talked about the Government’s introduction of design and distribution obligations for financial products in a draft Bill currently undergoing consultation. In today’s article, part two on the draft Bill, we discuss the Australian Securities & Investments Commission’s proposed new product intervention power, also contained in the draft Bill. [caption id="attachment_2821" align="aligncenter" width="640"] Photo by Victoria Heath on Unsplash[/caption] By Dr Drew Donnelly, Compliance Quarter. Background As mentioned in our previous piece, the existing regulatory framework for financial products relies extensively on disclosure for customer protection. This limitation is compounded by the fact that the Australian Securities & Investments Commission (ASIC) is only empowered to intervene where there has been a breach or suspected breach of the law. This has meant that, in various cases in the past,…
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1 July 2018: Are you getting prepared for the Banking Executive Accountability Regime (BEAR)?

Financial Services
The Banking Executive Accountability Regime (BEAR) is shaping up to be the most significant piece of business-related legislation hitting this year. We have discussed the details of these reforms on a few occasions: Budget 2017 and financial services: an opening for the minnows and a warning for the sharks (https://compliancequarter.com.au/budget-2017/); The Banking Executive Accountability Regime (BEAR) Exposure Draft- Part One (https://compliancequarter.com.au/bear_part_1/); Banking Executive Accountability Regime Exposure Draft – Part Two (https://compliancequarter.com.au/banking-executive-accountability-regime-exposure-draft-part-two/). Photo by Scott Webb on Unsplash By Dr Drew Donnelly, Compliance Quarter. Since we discussed it last, the Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Bill 2017 (the Bill) has been introduced to Parliament, passed through its initial stages in the House of Representatives, and been referred to the Senate Economics Legislation Committee (the Committee). The Committee has received public…
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AUSTRAC’s regulatory approach in 2017

AUSTRAC’s regulatory approach in 2017

Financial Services
On November 13, the Australian Transaction Reports & Analysis Centre (AUSTRAC) commented on the civil proceedings that it successfully brought against Tabcorp under Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) legislation (see here). In those statements, AUSTRAC CEO, Nicole Rose, summed up AUSTRAC’s approach to compliance succinctly: AUSTRAC will continue to collaborate with industry to strengthen the financial sector against serious financial crime and reduce regulatory burden where possible, but we will continue to take strong action against those companies who break the law where appropriate In today’s article, we look at how AUSTRAC’s risk-based approach to compliance has informed its regulatory and enforcement program over the 2016-2017 year, as evidenced in its 2017 Annual Report. This provides a good indication as to AUSTRAC’s future focus. Risk-based compliance A risk-based approach…
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ASIC Enforcement Review: Strengthening Penalties for Corporate and Financial Sector Misconduct

ASIC Enforcement Review: Strengthening Penalties for Corporate and Financial Sector Misconduct

Financial Services
The Australian Securities & Investments Commission ASIC Enforcement Review Taskforce (the taskforce) recently released a positions paper 'Strengthening Penalties for Corporate and Financial Sector Misconduct' (the positions paper) which it seeks public comment on. Today we summarise that report, setting out the positions that ASIC seeks feedback on. [caption id="attachment_2522" align="alignnone" width="640"] ASIC Corporate & Financial Misconduct[/caption] Background to ASIC Enforcement Concerns have been raised in a number of quarters that the penalties regime in legislation administered by ASIC is not fit-for-purpose, does not reflect the seriousness of some offending, and is inconsistent with the penalties for offending of similar seriousness in other financial contexts (such as penalties for insider trading). For further elaboration on these concerns see our previous piece Financial crime doesn’t pay – three ways in which…
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Upcoming changes to dispute resolution: the new Australian Financial Complaints Authority

Upcoming changes to dispute resolution: the new Australian Financial Complaints Authority

Financial Services
The Australian Financial Complaints Authority (AFCA) is the proposed new dispute resolution body for the financial sector. Last week, the Government announced the latest step in the establishment of this new body with the appointment of a transition team for its establishment. By Dr Drew Donnelly, Compliance Quarter In today’s article, we summarise the proposals to date for overhauling external dispute resolution in financial firms. Note, that it is proposed that ‘financial firms’ be defined broadly so that the new framework will affect and apply to a vast range of businesses including: All Australian Financial Services (AFS) licensees credit providers regulated superannuation funds approved deposit funds retirement savings account providers and life policy funds and insurers. The transitional arrangements The focus for the newly appointed team is to ensure a…
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Are You Producing The Correct Type Of Product Disclosure Statement?

Are You Producing The Correct Type Of Product Disclosure Statement?

Financial Services
Last week, the Australian Securities & Investments Commission (ASIC) announced that it is extending an existing form of regulatory relief for three types of financial product: multi-funds, superannuation platforms and hedge funds. Businesses which offer these financial products will continue to be exempt from the requirement to produce shorter product disclosure statements (shorter PDSs) until (at least) June 2018. By Dr. Drew Donnelly, Compliance Quarter As a key tool for protecting consumers, it is essential that any business offering financial products is complying with product disclosure requirements. Today we ask: what is a standard PDS, what is a shorter PDS, which businesses are required to produce the shorter PDS, and which are exempt? The standard PDS Recently, we looked at new client money protections for retail clients investing in off-the-counter…
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Expected Credit Loss: The New Way Banks Must Recognise Shifting Credit Risk

Expected Credit Loss: The New Way Banks Must Recognise Shifting Credit Risk

Financial Services
In OTC derivatives trading in Australia – are you playing by the rules? we looked at how new regulatory requirements have been introduced for some financial products (in that case, over-the-counter (OTC) derivatives), in the wake of the global financial crisis. New reporting rules and ‘mandatory clearing’ are intended to make the risks in these trades more transparent. By Dr. Drew Donnelly, Compliance Quarter Similarly, today’s topic concerns new rules intended to increase the transparency in the risk profile of a bank’s (or any other authorised deposit-taking institution’s), loan portfolio. On July 4, the Australian Prudential Regulation Authority (APRA) issued a letter to all Authorised Deposit-Taking Institutions titled Provisions for Regulatory Purposes and AASB 9 Financial Instruments. It sets out how APRA will apply a new ‘expected credit loss’ model…
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The low-down on the retail client money reforms for OTC derivatives

Financial Services
Today’s article is our third piece on OTC derivatives regulation in Australia. In today’s piece, we take a look at the new Treasury Laws Amendment (2016 Measures No. 1) Act 2017 (the Amendment Act), which was passed in to law in April of this year. This new law strengthens the regulatory regime for entities that trade over-the-counter (OTC) derivatives to retail clients.   By Dr. Drew Donnelly, Compliance Quarter.  The Amendment Act has a transition period of 12 months so that industry and regulators can getup to speed. Background: lack of protection for retail clients We have already mentioned the difference between the regulatory environment for financial products (such as derivatives), that are traded in financial markets, and those that are traded OTC (see OTC derivatives trading in Australia –…
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