Australian Regulators Weekly Wrap — Monday, 5 December 2022
5 December 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.
- FAR (Parliament): The Financial Accountability Regime legislation has not passed in the Spring sitting, given the last minute push by the Greens for penalties for Accountable Persons. Expect it early next year, and hopefully without the penalties (which are not justifiable for reasons this blog has previously covered, including given the broad principles-based nature of the regime, lack of guidance and regulatory hawkishness). More likely is that penalties will come in for some segment of the market — the Greens are currently angling for penalties for the big banks, but carving out the mutuals and smaller banks. Nothing on the insurance or super sector, who are also covered by FAR, so I hope that the AIST and ICA are in there fighting as hard as the ABA!
- CPS 190 (APRA): APRA has released its final Prudential Standard CPS 190 Recovery and Exit Planning (CPS 190), aimed at reinforcing the resilience of the financial system. The new standard aims to ensure that APRA-regulated entities are better prepared to manage periods of severe financial stress and it complements recent prudential reforms aimed at strengthening financial resilience. CPS 190 will come into effect from 1 January 2024 for banks and insurers, and from 1 January 2025 for RSE licensees.
- CDR (Treasury): The Albanese Government is now designating the expansion of CDR to the non-bank lending sector. CDR is a secure online system that enables consumers to get value from data that is collected about them through the provision of specific goods and services by consenting to that data being shared with trusted accredited third parties. The Government will shortly commence consultation with industry and government stakeholders on the development of rules and data standards for the non-bank lending sector. It took quite some time to implement for the banking sector (the tech issues with the core banking providers was particularly difficult), so non-bank lenders should not underestimate the challenge ahead / should actively engage in the consultation period to make life easier down the track.
- Medibank (APRA): APRA has announced that it has intensified its supervision of Medibank Private Limited in response to the recent cyber incident. It has said that it expects Medibank to undertake any recommended remediation actions and ensure there is appropriate consequence management, including “impacts to executive remuneration where appropriate.” APRA has also said that it will intensify its supervision of all entities not meeting the Information Security Prudential Standard CPS 234 as a result of the extensive independent review underway, and other supervisory activities. For those prudentially regulated boards concerned with Cyber attacks — as many will be — the fundamental questions to answer are: do you know what data you are holding? Do you know where it is? How do you know it is safe? And, do you need to retain it?
- Legislative modernisation (Treasury): The Federal Government has introduced the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Bill 2022. It has been referred to the Economics Legislation Committee for inquiry and report by 25 January 2023. Submissions are on 10 January 2023. Broadly, it permits: all documents (including deeds) which are required or permitted to be signed under the Corporations Act could be signed electronically or ‘in wet-ink’; and, inclusion of the Government’s response to Australian Law Reform Commission’s Interim Report A in cleaning up ‘unwarranted complexity in the law’ e.g. redundant definitions; changing certain longstanding ASIC legislative instruments into primary law e.g. Describing Debentures — Secured Notes. All good changes, but not too much of interest here — that will come when the Government tackles the ALRC’s later reports on the Corporations Act, and changing it into a more principles-based framework.
Thought for the future: AUSTRAC has launched Federal Court action to fine Star casinos for alleged anti-money-laundering breaches. It is the latest salvo in its broader focus on the gaming industry, after having focused on the banks. Its regulation is starting to appear broadly thematic. Which sector is next?
Published on Australian Regulators Weekly Wrap.
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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.