Australia's financial services regulatory and compliance landscape is changing rapidly - Clyde & Co's weekly Regulatory Roundup will ensure you are up to date with the most important changes. In each edition, we will set out five key developments from the past week for you to consider. 

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1. Remediation: the conduct regulator recently reviewed large financial institutions' compliance with RG 277 - the new remediation guide, and identified gaps where some licensees’ policies and procedures were inconsistent with RG 277 and could lead to poor outcomes for customers. It is a long guide, and there is a lot to consider in matching it with internal infrastructure e.g. the need for adopting positions beneficial to the customers where there are assumptions, so this is not all that surprising. ASIC has this week called on AFSL and ACL holders to ensure they remediate affected customers quickly and fairly per its RG 277, stating "ASIC expects all licensees to align their remediation practices with the guidance set out in RG 277. Licensees should consider the key findings from the review and make any necessary changes to their policies, procedures and practices."

2. Misleading representations: Bobbob Pty Ltd has paid $53,280 to comply with infringement notices regarding representations it made about a crypto-asset linked investment product, including that it: was approved or licensed by ASIC; was similar to, and therefore shared some attributes of, a bank account including the risk profile; was a safe and stable investment with minimal risk of customers incurring capital losses; and, earned all customers an interest rate of 7.6% per annum from the time they invested. The payment was connected with enforceable undertakings from the company, and authorised representatives. One of the largest risks facing investor product providers is making misleading & deceptive conduct statements - a strict liability provision under s. 12DA of the ASIC Act 2001 (Cth). Legal review of marketing material, particularly for complex investment products is par for the course. 

3. Reporting failures:  ASIC prosecuted 36 companies and secured over $700,000 in penalties for failing to: lodge financial reports; hold annual general meetings; and, to maintain the required number of directors and resident directors between 1 January 2023 and 30 June 2023. Easy wins for ASIC, and expect it to continue to focus on these areas, DDO and UCT as it has been lately. 

4. KYC amendments: from 29 September 2024, all online gambling service providers must complete applicable customer identification procedures (ACIP) that apply to online gambling service providers before creating an online gambling account or commencing to provide any designated service. The circumstances that previously allowed online gambling service providers to delay ACIP under section 10.4 of the AML/CTF Rules have been repealed. There is one year for online gambling service providers to update their programs and systems to accommodate these changes - start now!

5. Licensing forum: under Braithwaite's pyramid model of regulation, engaging with and educating the regulated population (and their trusted advisers) about the regulators' expectations is critical. That is why it is always great to attend the ASIC Annual Forum, and other more niche forums. We look forward to them at C&C. In this regard, the licensing forums have just been announced for relevant stakeholders i.e. those that do a lot of licensing work, and on the agenda is: financial accountability regime (see our website here); payment modernisation and crypto assets; debt management firms; cyber resilience; and enhanced regulatory sandbox. These issues will impact all our clients in some way or another, and we will be taking great notes for them! 

Learn more about our global regulatory and investigations team here.