Australian Regulators Weekly Wrap — Monday, 9 August 2021
9 August 2021
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.
- AML / CTF Rules (AUSTRAC): AUSTRAC has released draft Anti-Money Laundering and Counter-Terrorism Financing Rules for public consultation. The draft proposes to add Chapters 79 and 80, and amend Chapters 21 and 48 of the AML/CTF Rules. Under the changes, financial institutions will be permitted to carry out applicable customer identification procedures on a customer after opening an account, provided no transaction — other than an initial deposit made at the time of the account opening — is conducted in relation to the account; certain types of products, which are unintentionally captured by the definition of a ‘Stored Value Card’ in the AML/CTF Act will be excluded; the issue of an interest in a litigation funding scheme will be excluded, as will salary packaging administration services. Consultation on the draft Rules is open until 27 August 2021.
- ASIC quarterly report (ASIC): ASIC has released its second quarterly update for 1 April to 30 June 2021 which you can access here. There is no new information, but it is a useful run down of the major enforcement action which ASIC has engaged in, and where it is focusing on from a regulatory reforms perspective. No surprises that breach reporting, design and distribution obligations and unfair contract terms are at the top of that list (pp 11–12)…
- Add-on insurance (ASIC): ASIC has issued a new regulatory guide to assist with the implementation of the new deferred sales model for add-on insurance (RG 275). The deferred sales model introduces a mandatory four-day pause between the sale of a principal product or service and the sale of add-on insurance. The new RG — ASIC has been doing a great job pumping them out lately, I should say — explains: the scope of the deferred sales model — that is, which products and persons are subject to the deferred sales model; and, the requirements that apply to providers of add-on insurance before, during and after the add-on insurance deferral period (deferral period). This guide also explains ASIC’s powers to grant an individual exemption and how we will approach applications for individual exemptions. You can access the new guide here.
- Schemes of arrangement (Treasury): a creditors’ scheme of arrangement is a corporate restructuring process regulated under Part 5.1 of the Corporations Act 2001 (Cth). It allows individuals to restructure their company’s debt obligations where the company is in financial distress and seeking to reduce and/or renegotiate its debts. At present, it is rather cumbersome, expensive and time consuming process — the Government wants to change that in an effort to assist a post-COVID-19 economy rebound. To that end, the Government is seeking stakeholder views on the appropriateness and impact of applying an automatic moratorium on creditor claims during formation of a creditors’ scheme. Currently, no automatic moratorium is applied. The consultation paper, which closes for comments on 10 September 2021, is here. This does not mark the end of the Government’s tinkering with the insolvency regime, as it is also consulting on clarifying the treatment of trusts with corporate trustees; increasing the minimum threshold at which creditors can issue a statutory demand on a company from $2,000 to $4,000, commencing 1 July 2021; and, reviewing the insolvent trading safe harbour.
- ADIs & COVID-19 (APRA): the prudential regulator has released a consultation letter on regulatory support for authorised deposit-taking institutions offering temporary financial assistance to borrowers impacted by COVID-19. In essence, to assist ADIs in supporting their small business, home loan and other retail customers through this period, APRA is providing a temporary regulatory treatment for loans impacted by COVID-19 — ADIs will not need to treat a repayment deferral as a loan restructuring or the period of deferral as a period of arrears. A sensible proposal in my view to support the economy, the consultation paper is here.
Thought for the future: new complaints handling requirements come into effect on 5 October 2021, and apply to both AFSL and ACL holders. Thinking about ACL holders, October 2021 is going to be quite the month in terms of increased regulation — breach reporting, complaints and DDO being the main three. Two of the three are completely new for them, so one hopes ASIC will take this into account in its regulatory engagement strategy…
Published on Australian Regulators Weekly Wrap.
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Liam Hennessy, Partner
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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.