ASIC Chair James Shipton launched a report on director and officer oversight of non-financial risk at a recent Australian Institute of Company Directors event.
The report was a write-up of the first in a series of reviews via which ASIC’s Corporate Governance Taskforce will examine corporate governance practices. Consistent with its overall supervisory approach, ASIC says practical insight into what actually goes on inside companies facilitates the identifying of problems before they become breaches; and heightens engagement, assessment and feedback loops between regulated entities and ASIC.
Improving governance and accountability is one of ASIC’s seven key strategic priorities for the year ahead.
We can answer that. Being good is no longer good enough, with Treasury recently wrapping up consultation on beefing up ASIC’s licensing, banning and information gathering powers.
Most notably, the ‘good fame and character’ requirement for AFS licensees looks set to be replaced by the ongoing requirement that they be a ‘fit and proper person’ – a test that already applies to Australian Credit licensees and APRA-regulated institutions.
Changes will also expand the grounds on which ASIC can issue banning orders as well as their scope.
Soon your organisation will really need to be careful about why someone’s picture ends up in the paper.
The Federal Government has directed the ACCC to immediately commence an inquiry into home loan pricing. The ACCC is to investigate a wide range of issues, including:
- the rates paid by new versus existing customers
- how the cost of financing for banks affects their rate setting decisions
- why RBA cuts aren’t always passed on in full
- the information consumers use to choose their loan supplier
- barriers to more consumers switching to cheaper home loans.
The inquiry comes a week after banks denied existing customers were paying a “loyalty tax” and will build on the ACCC’s Residential Mortgage Inquiry, which handed its final report in December 2018.
The ACCC is expected to produce a preliminary report by the end of March 2020, with a final report due 30 September 2020.
Non-major lenders can’t rest easy, though, with the House of Representatives standing committee on economics calling up a few to face questioning over their implementation of Financial Services Royal Commission recommendations at the end of November.
Treasury has released for consultation:
- draft regulations to remove the exemption for funeral expenses policies from the definition of financial products for the purposes of the Corporations Act; and
- draft legislation to ensure that it is clear that the consumer protection provisions of the ASIC Act apply to funeral expenses policies.
As a result, from 1 April 2020 funeral expenses policy providers could be subject to a variety of obligations including:
- the requirement to hold an Australian financial services licence;
- the general conduct obligation to act efficiently, honestly and fairly; and
- anti-hawking provisions.
Consultation on the changes, which address recommendation 4.2 of the Financial Services Royal Commission, closes 18 October 2019.
The ACCC is ruminating on the Australian Banking Association’s Banking Code of Practice to ensure the revised Code will benefit low-income consumers and drought-affected farmers.
Among other measures, revisions aim to improve basic bank accounts and low or no-fee accounts by prohibiting informal overdrafts unless requested by the customer, and dishonour fees.
However, the ACCC contends that basic bank accounts could still be overdrawn without the customer’s agreement in some circumstances, with banks able to continue to charge interest on overdrawn amounts.
Therefore, it wants to strengthen the changes by imposing conditions that would:
- not allow interest to be charged in these cases
- require any such interest charges to be repaid to the customer.
ASIC is now consulting on its proposal to use its product intervention power to reform the sale of add-on insurance and warranty products by car yards.
ASIC wants to apply a deferred sales model and additional obligations to the offering of add-on insurance products and warranties where finance is also arranged for purchase of a motor vehicle.
Consultation on the measures, which would cover car dealers, finance brokers and salary packaging firms, closes 12 November 2019.
ASIC is urging consumers to properly evaluate whether an SMSF is appropriate for their circumstances.
While potential benefits might stem from using an SMSF, ASIC and Productivity Commission research finds that this strategy might not be suitable for people who want a simple superannuation solution, particularly those that have low financial literacy or limited time to manage their own financial affairs.
Recent ATO figures again reveal that total assets held in SMSFs remain larger than those in either industry or retail funds.
ASIC used its product intervention power to ban a model of lending whereby a short-term credit provider and its associate charge fees under separate contracts.
One of the affected entities, Cigno, immediately sought Federal Court review of ASIC’s decision, in a bid to have the Product Intervention Order Instrument quashed.
With retail OTC derivatives also in ASIC’s crosshairs, there’s further argy bargy to come as more industry sectors scrutinise the regulator’s exercising of its new powers.