Australian Regulators Weekly Wrap — Monday, 16 January 2023

16 January 2023
Liam Hennessy, Partner, Brisbane

Keeping on top of the latest financial services regulatory & compliance trends?

Investing time in your professional development within a rapidly changing financial services industry is challenging. To meet that challenge, the Australian Regulators Weekly Wrap is designed to keep you at forefront of your practice by quickly setting out the top 5 developments from the past week, analysis and practical considerations for the future.

  1. Financial advisers register (ASIC): ASIC’s Financial Advisers Register, published on Moneysmart, will soon display whether a financial adviser can provide tax (financial) advice services. To provide tax (financial) advice services to retail clients, a financial adviser must meet certain new requirements and will thereafter be known as ‘qualified tax relevant providers’. AFSLs who authorise financial advisers who are not taken to be QTRPs will need to update the FAR to record whether their financial advisers can provide tax (financial) advice services. If an adviser’s record is not updated by 1 February 2023, the FAR will not display whether the adviser can provide tax (financial) advice services. For more information, go to INFO 268.
  2. Greenwashing (ASIC): Black Mountain Energy Limited has paid $39,960 to comply with three infringement notices issued by ASIC in relation to concerns about alleged false or misleading sustainability-related statements made to the ASX between 23 December 2021 and 8 September 2022. BME said it was creating a natural gas development project with ‘net-zero carbon emissions’, and the greenhouse gas emissions associated with Project Valhalla would be net zero. ASIC took issue with these statements factually, and BME promptly paid the infringement notices — payment of an infringement notice is not an admission of guilt or liability. The action follows ASIC’s other infringement notices against Diversa Trustees Limited for greenwashing in December 2022, and is the start of a much broader trend I suspect.
  3. FIRB Penalties (Treasury): Penalties for investors who break foreign investment laws for residential property have doubled from 1 January 2023. As an example of how it works in practice, the Australian Taxation Office filed proceedings in regard to six alleged breaches of the Foreign Acquisitions and Takeover Act 1975 (Cth) (FATA) by a Mr Balasubramaniyan in July 2020 on the back of an investigation that found he had purchased four properties without approval from FIRB while owning two established properties. He was fined $250,000, but today his fine might be double that. ATO Assistant Commissioner, Keir Cornish, welcomed the penalty decision at the time, saying it would serve as “a clear deterrent to other foreign investors who believe they can operate outside of the law”.
  4. IR Derivatives (AFMA): AFMA’s Swaps Committee have adopted four changes to the AFMA Interest Rate Derivatives Conventions. Relatively technical amendments, they cover the new BBSW/SOFR basis swaps definition i.e. to replace LIBOR, and cover quotation and dealing language changes, e.g. amending the language for ‘Neutral Dates’ for cross currency basis swaps and deletes the reference to the last two days and first two days of each quarter to replace it with a convention stating that cross currency basis swaps will be quoted and reflect spot settlement of T+2.
  5. Banking Code (BCCC): The Banking Code Compliance Committee (BCCC) is developing the priorities for our 2023–24 work program. Previously, it looked at guarantees obligations, Part 4 (Vulnerability, Inclusivity and Accessibility) obligations, deceased estates and an inquiry into small business and agribusiness issues. BCCC is keen to hear new and emerging issues, particularly those that may cause harm to bank customers, including individual and small business customers, and has asked for responses to this survey to inform its work by 13 February 2023.

Thought for the future: ChatGPT is a chatbot launched by OpenAI in November 2022. One of the key features of ChatGPT is its ability to generate human-like text responses to prompts. Frighteningly good and free for those who want to test it, it has me deeply interested in its applications to reduce the ever-expanding risk and compliance burden in financial services regulation.

Published on Australian Regulators Weekly Wrap

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Authored by: 

Liam Hennessy, Partner

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

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