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. Greenwashing penalty: Federal Court has ordered Mercer Superannuation to pay a $11.3 million penalty after it admitted it made misleading statements about the sustainable nature and characteristics of some of its superannuation investment options. The statements marketed the ‘Sustainable Plus’ options as suitable for members who ‘are deeply committed to sustainability’, though the fund was invested in fossil fuel, alcohol and gambling companies. One for RSE entities to focus on, given many of their investments are outsourced to professional managers. In his decision, Justice Horan emphasised that the contraventions arose from failures by Mercer to “implement adequate systems to ensure that ESG claims in relation to its superannuation products were accurate, and to monitor and enforce the application of any sustainability exclusions associated with such ESG claims”.
2. AFSL relief: the saga continues! ASIC is extending for a further 12 months the transitional relief for foreign financial services providers from the requirement to hold an AFSL when providing financial services to Australian wholesale clients. The Australian Government has introduced legislation for a new licensing exemption regime for FFSPs under the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023. The new regime is due to commence on 1 April 2025, subject to passage of the draft bill.
3. AFSL cancellation / banning order: ASIC has cancelled the AFSL of United Global Capital Pty Ltd, and banned its director Joel Hewish from providing financial services for 10 years. In short, the client onboarding process recommended investments to clients that included speculative investments in Global Capital Property Fund Limited in which Mr Hewish had an interest, and attempted to contract out of personal advice obligations. ASIC also found that the client onboarding process lured people into investing their retirement savings in UGC-related products by making calls to prospective clients, using details obtained from a third-party website operator, offering them a free superannuation ‘health check’. Interestingly, ASIC found Mr Hewish was involved in UGC’s conduct as its responsible manager and key person under the licence, and demonstrated a fundamental lack of competence, and a cavalier attitude to his management of UGC and the importance of complying with financial services law.
4. Banking fees: Australia's big banks will refund over $28 million dollars after an ASIC review revealed four Australian banks systemically charged high fees to those customers who could least afford it. ASIC's Report 785 Better banking for Indigenous Consumers found that major banks kept at least two million Australians in high-fee accounts, even though they were on low incomes, including many relying on Centrelink payments.
International perspective: former President Trump has said that he will, if elected, establish a crypto and bitcoin presidential advisory council and pledged to make America a "bitcoin mining powerhouse." He also said that he will fire SEC Chair Gary Gensler, a noted crypto sceptic.
‘…it is vital that consumers in the financial services industry can have confidence in ESG claims made by providers of financial products and services. As is the case in many other industries, consumers may place great importance on ESG considerations when making investment decisions. Any misrepresentations in relation to ESG policies or practices associated with financial products or services, whether as an aspect of “greenwashing” practices or otherwise, undermines that confidence to the detriment of consumers and the industry generally’ Justice Horan
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