Australian Regulators Weekly Wrap — Monday, 21 November 2022

Keeping on top of the latest financial services regulatory and 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 the forefront of your practice by quickly setting out the top five developments from the past week, analysis and practical considerations for the future.

1. Crypto custody (Treasury): Treasury has announced that there will be custody rules introduced for digital assets in 2023. The exclusive in this AFR article, provides that Treasury will open consultations to safeguard crypto custody arrangements and regulate exchanges next year, following the current “token-mapping” consultation process. For more detail on what the custody arrangements are likely to look like, see our article here.
2. Privacy (Parliament): The Privacy Legislation Amendment (Enforcement and Other Measures) Bill 2022 has passed Parliament. It increases the maximum penalties for serious or repeated privacy breaches from the current $2.22 million to whichever is the greater of: $50 million; three times the value of any benefit obtained through the misuse of information; or, 30 per cent of a company’s adjusted turnover in the relevant period. It also provides the Australian Information Commissioner with greater powers to resolve privacy breaches and quickly share information about data breaches to help protect customers. These quick fix changes come ahead of an overall of the Privacy Act next year, after the AG’s review.
3. UCT (Parliament): The Treasury Laws Amendment (More Competition, Better Prices) Bill 2022 has passed Parliament. It amends the Competition and Consumer Act 2010 and Australian Securities and Investments Commission Act 2001 to establish a civil penalty regime prohibiting the use of, and reliance on, unfair contract terms in standard form contracts, and expands the class of contracts that are covered by the unfair contract terms. This is a big one — no longer will unfair contract terms be simply void, instead there will be penalties attached. Start reviewing those contracts now! (We have developed a comprehensive table to assist that review if it will assist —please email me for a copy.)
4. Federal corruption body (Parliament): The Albanese government’s national anti-corruption commission. A committee made up of politicians from several parties and both houses of parliament have been examining the proposal and on Thursday afternoon gave unanimous support for the bill. Labour is keen to push the legislation through, so the commission can commence operations mid way through 2022. Still no public hearings though — both major parties have held firm on that one!
5. Blockchain stock market (ASX): The Australian Securities Exchange (ASX) has axed the blockchain-based system it had hoped would underpin its CHESS core system replacement, and will head back to the drawing board. The ASX has said that there are “there are significant technology, governance and delivery challenges that must be addressed”. It is a setback, as noted by ASIC which stated “ASX’s announcement marks a significant setback to the replacement of critical national infrastructure for Australia’s cash equity markets and now brings into sharp focus the longevity of the existing CHESS platform…ASX has failed to demonstrate appropriate control of the program to date, and this has undermined legitimate expectations that the ASX can deliver a world-class, contemporary financial market infrastructure”. It is a shame, and hopefully the sharp works from the regulators (and wasted $250M +) will encourage ASX to do better next time. We need a replacement for the aging CHESS system.

Thought for the future: Spring sitting of Parliament ends on 1 December 2022. Expect the Parliament to push through a number of big pieces of legislation before they break e.g. FAR, CSLR, etc.

Published on Australian Regulators Weekly Wrap. 

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Authored by:

Liam Hennessy, Partner