ASIC’s Commissioner Sean Hughes speaks at the 3rd Australian National Whistleblowing Symposium.

“Investigating misconduct revealed by whistleblowers is just one touchpoint ASIC has with the whistleblower protection regime. We do more than just:

1. investigate misconduct and
2. enforce breaches of the protections.

We also promote and foster compliance with the whistleblower protection regime.”

He outlines:

1. the Corporations Act reforms
2. the scope of ASIC’s review and our findings
3. what we are asking Australian CEOs to do.

APRA has outlined the framework it uses when assessing whether macroprudential intervention is appropriate, and which tool or combination of tools would best achieve its intended objective.

The paper covers:

• the risk factors APRA uses to identify emerging threats to financial stability
• the policy tools APRA can choose from, and
• the importance of consulting with other members of the Council of Financial Regulators as part of the decision-making process.

Victoria’s Crown Royal Commission released its final report, affirming findings made by a similar inquiry conducted in NSW. The report alleges that Crown Melbourne “had engaged in…conduct that was variously illegal, dishonest, unethical and exploitative”.

The Commission recommended that a Special Manager should be appointed for a two-year period to report on what has occurred and how the results of inquiries conducted in NSW, Victoria and WA have been responded to by Crown. The regulator will then decide whether it is ‘clearly satisfied’ that Crown Melbourne has returned to suitability and is therefore eligible to retain its casino licence.

Findings included that Crown Melbourne may have breached several anti-money laundering obligations. AUSTRAC’s enforcement team, which has been reviewing Crown as a result of an AML compliance assessment commenced in September 2019, will examine the inquiry reports as part of its investigations.

All regulated entities should ensure that they are familiar with and adequately training all staff on relevant AML-related matters. You can follow industry-specific guidance provided by AUSTRAC on its website.

APRA has published its analysis of the performance of choice superannuation products ahead of releasing its first Choice Product Heatmap in late 2021.

APRA Executive Board Member Margaret Cole said the findings demonstrate the importance of exposing and addressing underperformance among choice products. “With the annual performance test for choice products coming into effect next year, trustees of products that show up bright red across the heatmap would be well advised to quickly rectify any weaknesses.”

Chair Wayne Byres discussed APRAs role as a forward-looking prudential supervisor, needing to not only address the challenges of today but also ensure be prepared for those of tomorrow. Ensuring bank deposits are safe, that insurers have the capacity to pay claims when they are made, and that superannuation funds are managed in members’ best financial interests, remains at the heart of what we do.

ASIC published its quarterly update covering the period July to September 2021. The focuses of its activity included supporting licensees’ transition towards law reform in several areas, such as:

• Hawking reforms
• Breach reporting
• Deferred sales model for add-on insurance
• Design and distribution obligations
• Licensing of insurance claims handling and debt management services.

ASIC Chair Joe Longo said the regulator was taking a reasonable, common-sense approach to implementing law reforms that commenced in October 2021. However, he reminded licensees that it continues to pursue appropriate enforcement, regulatory and remediation action to penalise misconduct, deter further breaches and protect Australian investors and consumers.

APRA has published the findings of three thematic reviews undertaken over the past 12 months covering: strategic and business planning; fund expenditure; and unlisted asset valuation practices.

Collectively, the three reviews outline risks and vulnerabilities that trustees must have front of mind to drive better practices and improve outcomes for members.

ASIC Deputy Chair, Sarah Court, called on all general insurers to review their pricing systems and controls to prevent consumer harm as a matter of priority. In particular, general insurers should:

• identify any differences between the prices (including discounts) they promised their customers (over at least the past five years) and what those customers were charged;
• comply with their breach reporting obligations;
• remediate any customers impacted, including refunding overpaid premiums; and
• fix the systems, processes, controls and governance practices that have led to promised discounts not being honoured.

Insurers who do not take these actions run the risk of further enforcement action.

ASIC Deputy Chair Karen Chester said, ‘These changes put in place fairness protections, so consumers are not sold products they don’t want or don’t need. The restrictions mean consumer needs will be central to how firms offer products.’ The guidance provides further clarity to the industry on how they can comply with the regime and how the reforms affect commercial practices.

ASIC outlines key issues, new and proposed changes to licensing processes, and other work that affects licensees. They also provide information and data on licensing and registration applications from the 2020–21 financial year. ASIC approved 458 new AFSLs and ACLs (compared to 394 last year). ASIC also approved 537 variation applications by existing licensees (the same as last year).

ASIC releases regulatory guidance to help credit and Australian Financial Services (AFS) licensees to meet new breach reporting obligations. Set to commence on 1 October 2021, the breach reporting reforms address long-standing concerns about breach reporting by making the reporting consistent, clearer and timely across the industry. For credit licensees, this is the first time they will be obliged to report certain breaches of the law to ASIC. Their obligation to report is almost identical to that of AFS licensees.

While many trustees in ASIC’s survey are taking significant steps to uplift their handling of consumer complaints in the lead up to the new requirements, ASIC has identified some important areas requiring additional effort:

• attention to governance arrangements;
• application of the expanded definition of ‘complaint’;
• implementation of the new maximum timeframes for IDR responses;
• identification, ownership and reporting of systemic issues; and
• data capture and integration.

The obligations most commonly breached include commitments to train staff on how to comply with the Code and be fair, reasonable and ethical in dealings with customers, privacy and confidentiality, responsible lending, debt recovery, and assisting with financial difficulty.

The Corporate Plan for 2021-25 sets out APRA’s strategic priorities for protecting bank deposit-holders, insurance policyholders and superannuation members during the current period of disruption and uncertainty, while also ensuring it is focused on preparing for future challenges.

ASIC Chair Joe Longo has released their Corporate Plan for 2021–25. The plan outlines ASIC’s regulatory priorities and actions over the next four years, with a focus on continuing to support the Australian economy through the COVID-19 pandemic and using smarter regulation to support business.

The new laws include design and distribution obligations, restrictions on the unsolicited selling of financial products (hawking), a deferred sales model for add-on insurance products, reference checking and information sharing requirements for financial advisers and brokers, and new requirements around how breaches are reported to ASIC and disputes are managed internally in firms. “These changes will support fairer outcomes for consumers and a stronger financial system for all Australians” ASIC Chair Joe Longo said.

The Government has released for consultation a draft Bill, which sets out financial reporting and auditing obligations in relation to registrable superannuation entities (RSEs). These changes will ensure that the auditor, and in certain circumstances, audit firms and audit companies, are subject to stringent eligibility, reporting and independence requirements.

APRA’s updated approach, comprising stronger requirements for being granted a banking licence and closer supervision of new entrants as they seek to establish themselves. Under the finalised approach:

• restricted ADIs must achieve a limited launch of both an income-generating asset product and a deposit product before being granted an ADI licence;
• there is increased clarity around capital requirements at different stages for new entrants, aimed at reducing volatility in capital levels and facilitating a transition to the methodology for established ADIs over time; and
• new entrants are expected to have a more advanced contingency plan to respond to financial stress, including an option to execute the ADI’s orderly and solvent exit from banking business.

APRA, the Australian Bureau of Statistics and the Reserve Bank of Australia propose to amend ARS 720.1 to accurately align with the latest version of Prudential Standard APS 220 Credit Risk Management (APS 220) released in December 2019.

Treasure has announced a suite of reforms to the automotive franchising sector, and a commitment to consult on further potential automotive franchising reforms to:

• ensure appropriate protections for automotive dealerships from unfair contract terms in their agreements with manufacturers;
• consider the merits of a standalone automotive franchising code; and
• consider options to achieve mandatory binding arbitration for automotive franchisees.