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…
Read More
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…
Read More

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 –…
Read More
OTC electricity derivatives: Are your risk management policies up to scratch?

OTC electricity derivatives: Are your risk management policies up to scratch?

Financial Services
Today, we continue our discussion about AFSL obligations looking at OTC electricity derivatives.   By Dr. Drew Donnelly, Compliance Quarter. Last time we talked about the regulatory reforms to OTC derivative transactions that have occurred over the last five years or so in Australia. And in The AUSTRAC risk management tool: Are you meeting your obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006? we talked about risk management procedures in relation to the anti-money laundering and counter-terrorism regulatory regime. In today’s piece, our second article on the regulatory framework for derivatives in Australia, we discuss an Australian Securities & Investments Commission (ASIC) review of risk management policies and procedures for participants in the OTC electricity derivative market and look at a few of the areas identified in that…
Read More
Financial crime doesn’t pay – three ways in which wrongdoers may soon be hit in the pocket

Financial crime doesn’t pay – three ways in which wrongdoers may soon be hit in the pocket

Financial Services
Previously, we discussed some core areas where financial professionals need to think about their own compliance, including compliance with the law and professional obligations. What exactly will happen though, to people and organisations that are in serious breach of their obligations? Recent cases suggest that regulatory agencies and the courts will deal severely with serious non-compliance. For example, in March the Federal Court agreed that Tabcorp would be required to pay a $45 million civil penalty for breaches of anti-money laundering and counter-terrorism financing laws. Referring to this case, the CEO of the Australian Transaction Reports and Analysis Centre (AUSTRAC), Paul Jevtovic commented: “There was a serious failure in the corporate governance and the size of the penalty reflects a significant and extensive non-compliance”. A take-home message, perhaps, is that…
Read More
Are you up-to-date with your obligations as a financial professional? Five quick questions

Are you up-to-date with your obligations as a financial professional? Five quick questions

Financial Services
Are you up-to-date with your obligations as a financial professional? Five quick questions We recently looked at some key regulatory changes in the financial services sector affecting both the FinTech and banking industries. A common theme through these changes is a clear commitment to cracking down on unethical and unprofessional behaviour in the sector. Furthermore, there is an ongoing Senate committee inquiry into the ‘Scrutiny of Financial Advice’, reviewing the current regulatory framework for financial advisors. We will have to wait until the committee reports back on 30 June 2017 to see if further changes lay in store for the sector. In the meantime, here is a five-question mental checklist for all those in the industry: 1) Have I kept pace with the latest industry and economic trends? In order…
Read More