Australian Regulators Weekly Wrap — Monday, 8 March 2021
8 March 2021
Liam Hennessy, Director, 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 the forefront of your practice by quickly setting out the top five developments from the past week, analysis and practical considerations for the future.
- BNPL CODE (AFIA): the Code of Practice for the Buy Now Pay Later (BNPL) sector has come into effect. The Code contains nine key commitments to customers, including that BNPL providers will be ‘fair, honest and ethical’ in dealings. Combined with their voluntary sign up to AFCA, it is a significant commitment to self regulation. What is interesting to me is the extent to which the new Code mirrors the provisions of the Design & Distribution Regime coming in for BNPL providers later this year. For example, one of the commitments is that “We will make sure our BNPL product or service is suitable for you”. The consistency is clever, and will assist them in not being overly weighted by two new regulatory regimes.
- ARS 115 (APRA): APRA is consulting on revisions to the capital framework for authorised deposit-taking institutions (ADIs) to implement ‘unquestionably strong’ capital ratios and the Basel III reforms. APRA has just released a response to submissions on proposed changes to Reporting Standard ARS 115.0 Capital Adequacy: Standardised Measurement Approach to Operational Risk. The response includes final operational risk reporting requirements, and a change in date for when the changes will commence. APRA has moved the implementation date of APS 115 for all ADIs to 1 January 2023 to align with the Basel Committee on Banking Supervision’s decision to delay the international start date of the Basel III standards. Interestingly, a lot of submissions appeared to be around confidentiality. APRA will determine data submitted for ARS 115.0 to be non-confidential 35 days after it is given to APRA…
- Council of Financial Regulators (Regulators): the Council of Financial Regulators is the coordinating body for Australia’s main financial regulatory agencies. There are four members — the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission, the Reserve Bank of Australia and The Treasury. The Reserve Bank Governor chairs the CFR and the RBA provides secretariat support. It has just released its Quarterly Statement — March 2021. There is no new news here, simply a recitation that they are collectively focusing on credit conditions, changes to insolvency laws, the general insurance business interruption cases winding their ways through the High Court, the volume complaints lodged with AFCA and cyber attacks. Still, a good summary of topical issues in financial services regulation nonetheless.
- Costs Recovery (ASIC): ASIC has published the final 2019–20 Cost Recovery Implementation Statement (CRIS). The CRIS sets out details of ASIC’s forecast regulatory costs — which it levies from the industry, in part — and activities by industry and subsector. These are long documents, and the headline for me is that surveillance ($53.885m) and enforcement costs $54.129m) are together up on last year. In 2018–2019 surveillance was $39.216m and enforcement $54.460m. While enforcement costs continue to run high, ASIC is also putting more resources into its surveillance activities. See page 15 / 208 of the report (my top read for the week!), for what those activities consist of e.g. breach reporting.
- REST (ASIC): ASIC has commenced civil penalty proceedings in the Federal Court against Retail Employees Superannuation Pty Ltd, a superannuation trustee, for false or misleading representations made about the ability of its members to transfer their superannuation. ASIC alleges that, from at least 2 March 2015 to 2 May 2018, REST made representations that discouraged, and in many cases delayed or prevented, members from transferring some or all of their funds to another superannuation fund. This is against the trustees duties to act in the best interests of its members. You can read the originating process here, and form your own judgements on REST’s media response: “We are disappointed with ASIC’s decision to launch proceedings about a matter that REST reported to the regulator, and for which REST is remediating affected members.”
Thought for the future: the pipeline of regulatory change projects in the works this year is significant; the lead ups to June and October 2021 are going to be intense. For those charged with leading these projects, I suggest booking your holidays around these periods!
Published on Australian Regulators Weekly Wrap.
Liam Hennessy, Director
Get in touch with the Gadens team to discuss any regulation and compliance issues.
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.