Financial services monthly wrap up - June 2019

Updated corporate whistleblower regime commences

ASIC has issued a reminder to the industry that the updated whistleblower regime came into effect on 1 July 2019. ASIC has also issued new information sheets, Information Sheet 238 Whistleblower rights and protections and Information Sheet 239 How ASIC handles whistleblower reports in response to the updated regime.

ASIC’s statement also reminds public companies, large proprietary companies and corporate trustees of registrable superannuation entities that a compliant whistleblower policy must be in place by 1 January 2020. ASIC has stated that it intends to release guidance in relation to these policies in due course.

More information can be found here.

APRA outlines proposed approach to product responsibility under the Banking Executive Accountability Regime

On 28 June 2019 APRA released a letter to ADIs that sets out how it intends to achieve heightened and clarified product accountability among senior executives. In particular, feedback is sought on the scope of accountability, product coverage, the structure of legal mechanisms and the application of joint accountability within ADIs and ADI groups.

While the changes would initially only apply to locally incorporated ADIs, APRA has strongly encouraged all ADIs, together with insurers and registrable superannuation entity licensees to consider the proposal. Submissions are due by 23 August 2019.

More information can be found here.

ASIC consults on new product intervention power use

On 26 June 2019 ASIC issued Consultation Paper 313 Product intervention power (CP 313) in relation to the proposed administration of its new product intervention power, which came into effect in April 2019.

CP 313 attaches a new draft regulatory guide that sets out the scope of the product intervention powers, together with details on when and how ASIC proposes to exercise this power and make such an intervention order.

Submissions are due by 7 August 2019. More information and a copy of CP 313 is available here.

ASIC releases estimated industry funding levies for 2018-2019

On 26 June 2019 ASIC released its Cost Recovery Implementation Statement (CRIS) that outlines its forecast regulatory costs and activities for the 2018-19 financial year. Invoices in relation to the 2018-19 year are expected to be issued in January 2020.

More information, together with the CRIS, can be found here.

APRA releases updated information on information security

On 25 June 2019 APRA published an updated Prudential Practice Guide CPG 234 Information Security to coincide with the cross-industry standard CPS 234 Information Security, which came into force on 1 July 2019.

More information can be found here.

APRA consults on approval powers for changes in control of superannuation entities

On 24 June 2019 APRA released a consultation in relation to the upcoming requirement for any party seeking to acquire greater than a 15% stake in an RSE licensee to seek APRA approval.

At a high level, the upcoming changes require that APRA be satisfied that any revised ownership structure will not impede the ability of the RSE licensee to meet its obligations under the Superannuation Industry (Supervision) Act 1993, including in relation to the best interests of members of the relevant fund(s).

More information can be found here.

ASIC amends fees and cost disclosure to align with Protecting Your Super Package laws and APRA releases FAQs

On 21 June 2019 ASIC amended the fees and costs disclosure requirements to ensure that it is consistent with the Treasury Laws Amendment (Protecting Your Super Package) Act 2019 and Regulations (PYSP). Relevantly, the PYSP bans exit fees from being charged by superannuation funds from 1 July 2019.

The amendment made to CO 14/1252 is technical only and generally operates to remove references to ‘exit fees’ from the fees and costs disclosure requirements. The amendment does not otherwise make any changes to the requirements set out in CO 14/1252. ASIC’s CO 14/1252 is available here, as well as further information in ASIC’s Media Release. 

On 3 June 2019 APRA released updates to its frequently asked questions (FAQs) regarding the enactment of the PYSP. In particular, FAQs are provided in relation to the updated fee requirements, insurance for inactive accounts and how to treat low-balance account transfers to the ATO. The updated Protecting Your Super Package FAQs can be accessed here. 

ASIC reports on decisions to cut red tape - October 2018 to March 2019

On 21 June 2019 ASIC released its report Overview of decisions on relief applications (October 2018 to March 2019) (REP 620) that outlines decisions on relief applications and ASIC’s efforts to reduce red-tape during the period between 1 October 2018 and 31 March 2019. During this period, ASIC granted relief from provisions of Corporations Act or the National Consumer Credit Protection Act in relation to 709 applications. 

REP 620 sets out the key statistics in relation to and some examples of relief granted, refused or withdrawn in relation to AFS licensing, disclosure, managed investments, mergers and acquisitions, conduct and credit.

Further information is available in ASIC’s Report REP 620 can be found here as well as in this Media Release. 

ASIC approves changes to AFCA Rules for legacy complaints

On 18 June 2019, ASIC approved changes to the Australian Financial Complaints Authority (AFCA) Rules. Under the changes, AFCA may hear complaints in relation to financial misconduct dating back to 1 July 2008.

In order for a ‘legacy’ complaint to be considered it must:

• not be an excluded complaint; 
• relate to a compulsory member of the AFCA scheme who is a member of the AFCA scheme at the time the complaint is made; and
• be made during the lodgement period of 1 July 2019 to 30 June 2020.

More information is available here.

ASIC issues guidance to licensees to protect against share sale fraud

On 17 June 2019 ASIC issued Information Sheet 235 ‘Protecting against share sale fraud’ (INFO 235) providing guidance to Australian financial service licensees on how to mitigate risks to their clients and business of share sale fraud. At a high level, share sale fraud occurs where a person is not who they claim to be and sells shares which do not belong to them. 

INFO 235 provides further guidance in relation to one-off share sales, client due diligence, intermediary clients, anti-money laundering and counter-terrorism financing training and suspicious matter reporting.  

More information about ASIC’s guidance and expectations in this regard can be found in Information Sheet 237 as well as generally in their Media Release. 

ASIC amends relief conditions for superannuation and retirement calculators

On 5 June 2019, ASIC amended the ASIC Corporations (Generic Calculators) Instrument 2016/207 to ensure that retirement and superannuation calculators are adjusted for inflation. From 5 December 2019, calculators will need to either:

• use the default inflation rate set out in ASIC’s Instrument (3.2% for superannuation or retirement calculators and 20.5% for other calculators); or
• use an alternative inflation rate provided that certain disclosure requirements are met.

Until 5 December 2019, superannuation and retirement calculators must continue to disclose whether or not estimates take into account changes in the cost of living.

ASIC has also updated its Regulatory Guide 167 Licensing: Discretionary Powers to reflect these changes.

A copy of the ASIC Instrument can be found here as well as ASIC’s media release here.