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. Claims handling: ASIC has initiated civil penalty proceedings against United Super Pty Ltd, the trustee of the Construction and Building Unions Superannuation Fund (Cbus), alleging systemic failures in handling death benefits and total and permanent disability (TPD) insurance claims. Between September 2022 and November 2024, over 10,000 members experienced delays, with some waiting over 12 months for claim processing, impacting families facing critical financial and personal hardships. ASIC alleges that Cbus failed to address the scale of the issue, misreported to ASIC, and breached its obligations under the Corporations Act. The financial loss to members is estimated at $20 million, and ASIC is seeking penalties and compliance orders, highlighting the trustee’s responsibility to prioritise timely and fair member services.

2. Simplifying the laws: In his keynote at the ASIC Annual Forum 2024, ASIC Chair Joe Longo emphasised the pressing need to simplify Australia's complex regulatory landscape to better serve both current and future generations. Highlighting challenges such as fragmented legislation, rising public expectations, and rapid technological advancements, Longo called for a national discussion on regulatory complexity. He announced ASIC's initiative to establish a Simplification Consultative Group to streamline regulatory processes and ensure clarity for businesses, investors, and consumers. Stressing that "simplicity means enforceability," Longo underscored the importance of clear laws in fostering compliance, protecting consumers, and enabling innovation, while cautioning against the risks of continued complexity. It is not the first time the subject has been under the microscope, with the ALRC having come to a similar conclusion last year. The issue tends to be, however, that as regulators move to more principles-based regulation e.g. acting with ‘integrity’ under the Financial Accountability Regime, the interpretational scope can cause its own challenges. 

3. Enforcement priorities: ASIC has unveiled its enforcement priorities for 2025, emphasising consumer protection amid rising cost-of-living pressures. Key focus areas include tackling misconduct that exploits superannuation savings, targeting unscrupulous property investment schemes, addressing unlawful debt management and collection, and prosecuting business models that circumvent consumer credit protections. ASIC also plans to crack down on insider trading with a newly established dedicated team, as well as greenwashing, cyber-security lapses, and failures in member services within the superannuation sector. Deputy Chair Sarah Court highlighted ASIC’s commitment to safeguarding financially vulnerable Australians, noting that enforcement actions in 2024 led to increased investigations and civil proceedings. ASIC’s enduring priorities, such as market integrity and consumer protection, remain in place. 

4. Insurance: At the Insurance Council of Australia 2024 Annual Conference, ASIC Commissioner Alan Kirkland stressed the importance of insurers meeting customer expectations to rebuild trust and confidence in the industry. Key priorities include improving claims handling, dispute resolution, and support for vulnerable customers. Kirkland highlighted ongoing concerns, such as unresolved claims from the 2022 floods and under-resourced internal dispute resolution teams, leading to delays and unnecessary escalation of complaints to external bodies like AFCA. He also urged insurers to proactively identify and address customer vulnerability, noting that anyone can experience vulnerability during challenging times. ASIC plans to increase transparency through granular reporting of dispute resolution data, aiming to drive improvements across the sector. Kirkland concluded by urging insurers to deliver timely and fair outcomes to customers, emphasising that listening and responding to simple customer expectations is critical to the industry's reputation and customer trust.

International perspective: Since the global financial crisis, sophisticated regulatory jurisdictions have focused more on principles-based regulation e.g. using words like ‘integrity’ to achieve regulatory outcomes, and personal liability. Australia is following this trend, and the Financial Accountability Regime will come into effect for super funds and insurers in March 2025 and embodies both of these principles. (For more detail, see our dedicated site here.) Ahead of this time, we will be engaging in academic literature reviews to identify how key requirements such as ‘integrity’ are interpreted in the UK, Australia and other key jurisdictions to provide clarity to the market. We'd welcome any input on other literature reviews we can do to assist our clients.