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. AFSL licensing: ASIC is developing a new digital portal for licensing, to be used for applying, varying, and cancelling an Australian financial services licence. A limited, invitation-only pilot launch opened on 12 August 2024, and it is wonderful! The modernisation simplifies the experience of AFS licence applicants and is more streamlined and user-friendly. All AFS licensees and applicants will transition to the new AFSL Portal in the first quarter of 2025.

2. Margin lending: the Federal Court has ruled Bit Trade Pty Ltd, the operator of the Kraken crypto exchange in Australia, failed to comply with design and distribution obligations when offering a margin trading product to Australian customers. Since 5 October 2021, Bit Trade offered its “margin extension” product to customers trading on the Kraken exchange without a target market determination. As a result, Bit Trade was found to have contravened s994B(2) of the Corporations Act 2001 (Cth) each time it made the product available to a customer. The margin lending product did not constitute a financial product for licensing purposes under Division 3 of Chapter 7 of the Corporations Act, though did meet the extended financial product definition which applies for the purpose of DDO obligations under Section 994AA of the Corporations Act (which refers to Division 2 Part of the Australian Securities and Investments Commission Act 2001 (Cth))  and thus required the publication of a TMD accompanying systems and controls. In its media release, ASIC stated “Entities providing crypto-related products should be aware that many such products are financial products” - it is an evolution in thinking, which is also likely to be reflected in the forthcoming ASIC INFO 225 on crypto assets. 

3. Assistance with liquidators: ASIC has prosecuted 78 individuals for failing to assist liquidators over the six months from 1 January to 30 June 2024. These enforcement actions followed the failure of company officers and other individuals to provide registered liquidators with access to company books and submit a report on company activities and property.  In a market stressed by rising cost of goods, it signals the regulators intent to meaningfully assist liquidators in undertaking their vital market function. 

4. Greenwashing: ASIC has made 47 regulatory interventions to address greenwashing misconduct during the 15-month period up to 30 June 2024, including the commencement of two Federal Court proceedings and over $123,000 in infringement notice payments. Its new Report 791 ASIC’s interventions on greenwashing misconduct: 2023–2024 (REP 791), provides that ASIC's actions are aimed at stamping out misleading and deceptive conduct in relation to sustainable finance-related products and services.

International perspective: the UK FCA has released TR24/2: General insurance and pure protection product governance thematic review. The report records that insurers and brokers have improved governance and oversight of how products are designed, managed, reviewed, and distributed, but many still cannot show how they are providing fair value to customers or that they were receiving good outcomes.