Australia's current financial services regulatory & 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 key developments from the past week for you to consider.
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1. FAR guidance: ASIC / APRA have released a cross-industry package on FAR – please see here. (FAR came into effect for banks on 15 March.) Most interestingly, is the description of key functions for insurance and super funds. A notable extension of the regime by ASIC / APRA, as we expected e.g. ‘member outcomes’ for super funds and ‘scams’ for general insurers. There is now one year until FAR comes into effect for insurers and super funds and, like CPS 230, the regime takes time to implement. Thomson Reuters has today published our practical law series on FAR from our last ten years of work on these accountability regimes in the UK, HK and Australia. The link is here, otherwise you can visit our dedicated FAR website is here.
2. Financial Services Grid: the Federal Government announced it will introduce a Financial Services Regulatory Initiatives Grid (Grid) that will significantly impact the financial sector, including banking, credit, insurance, superannuation, investment, payments and capital market entities. The intention of introducing the Grid is to provide a transparent roadmap to enable financial services businesses to more effectively engage with the regulators, particularly ASIC, APRA, ACCC, Reserve Bank and the ATO. It is anticipated the Grid will allow regulators to avoid duplication, build shared strategic priorities, and focus on how to best implement reforms which, in turn, will enable the efficient allocation resources of financial services businesses. Although the Grid will be modelled off the tried and tested UK equivalent grid, financial sector stakeholders will be consulted in its development by Treasury. The Insurance Council of Australia has announced its support of the Grid, with CEO Andrew Hall commenting it “will provide much-needed predictability for the insurance industry, particularly as we navigate an increasingly volatile business environment and the impacts of extreme weather events”.
3. ACCC’s Enforcement Priorities: the ACCC released its enforcement and compliance priorities for 2024-25, and there are many important changes. There are three new dynamic priorities relating to the supermarket sector, aviation, and consumer law compliance by NDIS providers. The priorities relating to sustainability and unfair contract terms in consumer and small business contracts remain unchanged. Further, the priorities relating to supply chains, competition issues for digital platforms, and exclusive arrangements have been removed. The scams and protecting small businesses priorities have moved from the dynamic list to the ACCC’s list of enduring priorities. The enduring priorities list otherwise remains unchanged, with the ACCC prioritising cartel conduct, anti-competitive conduct, product safety, and action to protect vulnerable and disadvantaged consumers and First Nations Australians.
4. Draft BNLP reforms released: on 12 March 2024, the Treasury released for consultation a package of reforms to regulate low-cost credit contracts (LCCC), including Buy Now, Pay Later. The package includes a proposed bill to amend the National Consumer Credit Protection Act 2009 (Cth) (NCCPA), regulations, an explanatory memorandum and statement. The proposed bill brings LCCCs within the scope of the NCCPA and requires providers to hold and maintain an Australian Credit Licence. Critically, they will need to comply with responsible lending obligations i.e. ensuring that consumers can repay credit given to them without hardship. The reforms also modify the existing responsible lending obligation framework and, interestingly, introduce anti-avoidance provisions to prevent LCCC providers from structuring their businesses to circumvent regulation. Submissions to the Treasury close on 9 April 2024.
5. Finder crypto decision: the second major cryptocurrency decision in Australia has been handed down in relation to Finder Wallet (see here) – a loss for ASIC, as Finder’s product was held not to be a debenture (being a financial product which requires an AFSL). Instead, the court found that the “…true legal effect is that the customer purchased or transferred an amount of TrueAUD to Finder Wallet and title to the cryptocurrency that was transferred then passed from the customer to Finder Wallet. It says that allocation did not create a debt owed by Finder Wallet to repay Australian dollars to the customer as a debt. Rather, the customer had a contractual right to receive, at the end of the “Earn Term” … an amount of TrueAUD equivalent to the allocation and an additional amount of TrueAUD for the use of the allocation during the Earn Term”. This case does not disturb the recent Blockearner case (which was an equity-based product i.e. a managed investment scheme), and stresses the financial services regulatory complexity around combining Web3 and traditional financial products as we outlined in more detail in the AFR this week here.
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"The FAR will impose a strengthened responsibility and accountability framework for APRA-regulated entities in the banking, insurance and superannuation industries and their directors and most senior and influential executives. In doing so, it is designed to improve the risk and governance cultures of those financial institutions" (ASIC)
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