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Latest Banking & Finance Law Updates in Australia for 2025

Expertly authored practice-area news, key cases and legislative reforms. Register or log in below to access the full legal updates.

AUSTRAC implements updated tipping off regulations

Date: 31 March 2025
Source: Australian Transaction Reports and Analysis Centre (AUSTRAC)

Abstract:

Effective 31 March 2025, amendments to the "tipping off" offence under Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) legislation have come into effect. The revised offence now focuses on whether a disclosure could reasonably be expected to prejudice an investigation, shifting the emphasis from the act of disclosure itself to the potential harm it may cause. It carries a maximum penalty of approximately $39,000 or two years’ imprisonment.

The changes are part of broader reforms aimed at expanding and simplifying the AML/CTF framework, which has been in place for nearly two decades. Entities currently subject to the legislation — such as banks, casinos, remittance providers, and money lenders — must now assess the potential impact of disclosing certain information, except where disclosure is made to AUSTRAC.

The updated offence seeks to balance the need for intelligence protection with the practicalities of business operations. It recognises that while disclosing sensitive information may assist criminals in concealing illicit activities, appropriate information sharing within and between businesses remains crucial in detecting and preventing money laundering, terrorism financing, and other serious crimes. Additional entities, including those in…

Sunshine Loans Pty Ltd v ASIC

Date: 28 March 2025
Court: Federal Court of Australia
Judge(s): Perram, Bromwich and Colvin JJ
Judgment date: 24 March 2025
Catchwords: s. 47 (1)(d) National Consumer Credit Protection Act 2009 (Cth) and ss 24 (1A)(a) and (b) National Credit Code (Code) contraventions — small amount credit contracts — permitted fees — liability — regulator standing to enforce civil penalty provisions in the Code.

Abstract:

The Full Court has dismissed an appeal by Sunshine Loans Pty Ltd (Sunshine) and upheld the decision in Australian Securities and Investments Commission (ASIC) v Sunshine Loans Pty Ltd (No 2) [2024] FCA 345.

Background

Sunshine is a provider of small amount credit contracts (SACCs) and charged an amendment fee of $35 to thousands of its customers who had entered into SACCs. The fee was paid by many of them. ASIC initiated proceedings alleging that by entering into the contracts and by charging and receiving a fee that did not fall within fees and charges permitted under s 31A of the Code, Sunshine contravened s 47(1)(d) of the NCCP Act. ASIC sought declarations of contravention of the Code and orders imposing pecuniary penalties. Sunshine defended the proceedings. In addition to submitting that ASIC had…

Report of Senate Greenwashing inquiry deadline further extended to August 2025

Date: 28 March 2025
Source: Federal Parliament

The reporting date for the Senate Standing Committee on Environment and Communications (Committee) inquiry into Greenwashing (Inquiry) has again been extended until 5 August 2025.

The Senate referred the inquiry to the Committee in March 2023, with an initial reporting date in December 2023. That was subsequently extended several times and had most recently been due to be provided to the Senate on 28 March 2025.

Submissions to the Inquiry closed in June 2023, with 178 submissions received from a broad range of stakeholders, including regulators, businesses and advocacy groups. Public hearings were held in April and May of 2024.

Information about the Inquiry, including the terms of reference and copies of all submissions, tabled documents and questions on notice is available on the Committee website.

AUSTRAC releases guidance on tipping off reforms

Date: 24 March 2025
Source: austrac.gov.au

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has released guidance on reforms to the tipping off offence. The revised tipping off offence is set out in s 123 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. It will apply from 31 March 2025.

AUSTRAC’s guidance is aimed at providing assistance in understanding the new tipping off offence which prohibits a person disclosing information relating to the reporting of suspicions of unlawful activity to AUSTRAC where disclosure would or could reasonably be expected to prejudice an investigation of an offence against a law of the Commonwealth or of a State and/or Territory. The guidance provides examples of tipping off risks when dealing with customers and also includes explanations and information on:

  • the types of information protected by the tipping off offence;
  • who the tipping off offence applies to;
  • what it means to prejudice and investigation;
  • disclosures that are not likely to be considered tipping off and
  • reducing the risk of tipping off.

The guidance “Tipping off reforms” is available on AUSTRAC’s website.

ASIC commences review of car finance sector

Date: 23 March 2025
Source: Australian Securities and Investment Commission (ASIC)

In November 2024 the ASIC flagged misconduct relating to used car finance offered to vulnerable customers by lenders as an enforcement priority, consistent with this ASIC has announced a comprehensive review of the motor vehicle finance sector. This initiative, aims to scrutinize the compliance of lenders, brokers, and other intermediaries, while also examining the management of loan defaults, hardship practices, and dispute resolution processes.

Scope and objectives of the review

ASIC's review will encompass the practices of seven lenders, identifying areas for improvement across the sector. The review will also extend to brokers and intermediaries as the project progresses. The primary objective is to enhance processes, practices, and compliance within the car finance industry, thereby mitigating potential consumer harm.

Enforcement actions and ongoing investigations

ASIC has emphasized its readiness to take enforcement action where necessary to protect consumers. Misconduct relating to used car finance was also an enforcement priority for the regulator in 2024 and currently, ASIC is pursuing legal proceedings against Money3 Loans Pty Ltd for alleged breaches of responsible lending obligations. Additionally, proceedings are underway against car dealership Diamond Wheels…

Active Super fined $10.5 million for ‘greenwashing’ misconduct (Australia Securities and Investments Commission v LGSS Pty Ltd (No 3))

Date: 19 March 2025
Court: Federal Court of Australia
Judge(s): Justice O’Callaghan
Judgment date: 18 March 2025
Catchwords: Imposition of civil penalties — false or misleading representation — written adverse publicity notice — greenwashing

Abstract:

The Federal Court of Australia has fined LGSS Pty Ltd (LGSS), the trustee for Active Super Fund (Active Super) $10.5 million for ‘greenwashing.’ This penalty is a result of Active Super’s contravention of ss 12DB(1)(a) and 12DF(1) of the Australian Securities and Investments Commission Act 2001 (ASIC Act).

Following s 12GBB of the ASIC Act, Active Super must pay this penalty to the Commonwealth within 30 days of receiving the notice.

Background

LGSS was established to act as the trustee for Active Super. As of June 2024, Active Super managed approximately $14.7 billion in superannuation assets for 86,547 members.

On 5 June 2024, the Federal Court ruled that Active Super engaged in ‘greenwashing’ by making false or misleading representations about its environmental, social and governance (ESG) credentials to its members and potential members. Between February 2021 and June 2023, Active Super claimed to have eliminated its investments in gambling…

ASIC puts small amount credit contract providers on notice

Date: 17 March 2025
Source: asic.gov.au

The Australian Securities and Investments Commission (ASIC) has released Report 805, Falling short: Compliance with the small amount credit contract obligations (Report). The Report summarises findings and observations from a review undertaken by ASIC of Australian credit licensees who offered small amount credit contracts (SACC) from December 2022 to August 2024. The Report notes 3 key concerns ASIC has in relation to the conduct of some small and medium amount credit contract providers and warns that it will consider further regulatory action. The areas of concern are:

  • credit providers failing to meet their responsible lending obligations by entering into unsuitable contracts;
  • credit providers failing to identify an appropriate target market and distribute their products accordingly; and
  • credit providers operating business models that may be attempting to avoid the additional consumer protections imposed on SACCs.

Responsible lending obligations and unsuitable contracts

The Report provides the following examples of conduct ASIC considers may run the risk of a SACC provider not meeting its responsible lending obligations.

  • Offering alternative credit products (such as continuing credit contracts) to a consumer who has applied for a SACC but is ineligible…

Regulations for Buy Now Pay Later credit contracts registered

Date: 10 March 2025
Source: Federal Register of Legislation

Abstract:

On 7 March 2025 the National Consumer Credit Protection Amendment (Low Cost Credit) Regulations 2025 (Amending Regulations) were registered. This action follows on from several stakeholder consultations, the most recent was undertaken between 5 February 2025 and 12 February 2025. No changes were made to the Amending Regulations arising from this most recent consultation.

The purpose of the Amending Regulations is to amend the National Consumer Credit Protection Regulations 2010 to support amendments made by the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 (Cth) (BNPL Act) to the National Consumer Credit Protection Act 2009 (Cth) and the Credit Code (i.e. Schedule 1 to the Act) to establish a regulatory framework for low cost credit contracts (LCCC), including buy now pay later contracts.

Key provisions of the Amending Regulations

The Amending Regulations prescribe (among other things):

  • the inquiries that must be made about a consumer’s financial situation before making an assessment of whether a LCCC will be unsuitable for a consumer if the contract is entered, or the credit limit of the contract is increased;
  • requirements…

Rules extending Consumer Data Right obligations to non-bank lenders finalised

Date: 6 March 2025
Source: Federal Register of Legislation

Abstract:

On 3 March 2025 the Competition and Consumer (Consumer Data Right) Amendment (2025 Measures No. 1) Rules 2025 (Cth) (Amending Rules) were registered. This action follows on from several stakeholder consultations undertaken by Treasury, the most recent on exposure draft rules (Draft Rules) during December 2024. Details of consultation papers including the Draft Rules are available on Treasury’s website.

The purpose of the Amending Rules is to extend the Consumer Data Right (CDR) to the non-bank lending (NBL) sector and narrow the scope of CDR data for the banking and NBL sector.

The Amending Rules provide that NBL’s with data sharing obligations are to be classified as either an initial or large provider. The Amending Rules set out timeframes for the staged implementation of the CDR dependent on this classification.

  • Initial providers are NBLs with over $10 billion in resident loans and resident finance leases as reported to Australian Prudential Regulation Authority (APRA) for the calendar month preceding the commencement date and on average over the 12 previous calendar months (each associated NBL’s loans/leases to be included in the calculation)…

New Banking Code of Practice launched

Date: 4 March 2025
Source: Australian Banking Association

The Australian Banking Association (ABA) has launched its new Banking Code of Practice (BCOP) dated 28 February 2025, replacing previous version dated 5 October 2021. The new BCOP will apply to all relevant banking services and guarantees entered into after 28 February 2025. Transitional provisions will apply to on- going agreements provided prior to 28 February 2025 or where documentation was sent before this date.

The BCOP sets out standards of practice and service in the Australian banking industry with the objective of providing safeguards and protections to their customers and the wider community, including those not set out in law. The updated BCOP introduces significant changes, particularly benefiting small businesses, guarantors, and vulnerable customers, and has been approved by the Australian Securities and Investments Commission (ASIC).

Key Developments:

  1. Expanded Definition of Small Businesses: The new BCOP broadens the definition of small business. Loans to businesses that have an annual turnover of less than $10 million in the previous financial year, fewer than 100 full-time equivalent employees; and less than $5 million total debt to all credit providers (other than debt to which the National…

ASFI releases Australian Sustainable Finance Action Plan 2025-2027

Date: 3 March 2025
Source: Australian Sustainable Finance Institute

The Australian Sustainable Finance Institute (ASFI) has released the Australian Sustainable Finance Action Plan for 2025-2027 (Action Plan), marking a significant step forward in supporting the growth of sustainable finance in Australia. The Action Plan outlines 26 priority actions aimed at reducing emissions, building climate resilience, protecting nature, enabling First Nations economic self-determination, and supporting financial inclusion and community resilience.

The 26 priority actions are categorised across the following key action areas:

  1. Sustainable finance policy and regulation
  2. Alignment of regulatory settings with sustainability
  3. National targets, plans and policies
  4. Data and reporting
  5. Financial innovation
  6. Leadership and culture
  7. Capability
  8. International engagement and collaboration

These represent the most important actions necessary in 2025 to 2027 to deliver ASFI’s Australian Sustainable Finance Roadmap established in 2020 (Roadmap). The Action Plan reflects on the progress to date on delivering the Roadmap outcomes, which include the release in 2024 of the Federal Government’s own Sustainable Finance Roadmap (see our previous update here).

What’s next for sustainable finance?

Building on the integral components of Australia’s sustainable finance architecture, together with the Federal…

Foreign buyers to be temporarily banned from acquiring established residential dwellings from 1 April 2025 to 31 March 2027

Date: 24 February 2025
Source: Australian Taxation Office | The Treasury

The government has announced an upcoming temporary ban on foreign persons (including temporary residents and foreign-owned companies) buying established residential dwellings.

There will be limited exceptions to the ban. There will be an exception for investments that significantly increase housing supply or support the availability of housing supply. There will also be exceptions for the Pacific Australia Labour Mobility scheme. Existing exceptions for purchases of residential land or dwellings by permanent residents, New Zealand citizens, and spouses of Australian citizens and permanent residents or New Zealand citizens (where purchasing as joint tenants), will remain in place.

The government also announced enhanced compliance and enforcement activities by the Australian Taxation Office and audit activities by the Treasury. These activities will focus on identifying and preventing land banking by foreign investors and ensuring compliance with development timeframes for vacant residential land already owned by foreign persons.

Full details of the legislative and policy changes are not yet available. The ATO and Treasury are expected to publish updated guidance prior to the commencement…

ASIC proposes additional relief for licensees under reportable situations regime

Date: 20 February 2025
Source: Australian Securities and Investments Commission | ASIC

The Australian Securities and Investments Commission (ASIC) is inviting feedback on a proposal to expand relief currently available to Australian financial service licensees and credit licensees from obligations under the reportable situations regime. Currently credit licensees are required to notify ASIC of breaches of certain misleading and deceptive conduct provisions (MDC) and civil penalty provisions (CPP) contained in the ASIC Act 2001 (Cth) and National Consumer Credit Protection Act 2009 (Cth) (unless exempted by regulation or instrument). Under the proposed relief licensees would not be required to submit a notification to ASIC where there has been a breach of the relevant MDC provisions or CPP provisions provided that:

  • The breach is rectified within 30 days of its occurrence.
  • The number of impacted consumers does not exceed five.
  • The total financial loss or damage to all impacted consumers is no more than $500, even if the loss has been remediated.
  • The breach does not involve contraventions of the client money reporting rules or clearing and settlement rules.

ASIC proposes to consolidate this additional relief and the relief currently provided…

AUSTRAC intensifies scrutiny on remittance and digital currency sectors

Date: 19 February 2025
Source: Australian government

AUSTRAC, Australia's anti-money laundering and counter-terrorism financing regulator, has issued alerts to over 100 operators of remittance services (money transfer businesses) and digital currency (cryptocurrency) exchanges. The alerts are a precursor to potential regulatory action and identify AUSTRAC’s concerns that operators may not be reporting suspicious matters and transactions as required under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth)(AML/CTF Act).

This action follows on from earlier regulatory action taken by AUSTRAC against several digital currency exchange providers. The regulatory actions taken by AUSTRAC include the cancellation, suspension, and refusal of registration renewals for those providers that failed to meet their obligations under the AML/CTF Act. Additionally, providers have had conditions imposed on their registrations, with the potential for further action if compliance is not achieved.

The entities affected by these actions include Auaisa Trading Pty Ltd, Amco Travelling and Exchange Pty, Blue Star Exchange Pty Ltd, B-Paywize Pty Ltd, W Solution Group Pty Ltd, and TSS Farms & Group Pty Ltd, whose key personnel have faced legal proceedings or convictions. Furthermore, DIGI-SEND E-Money Pty Ltd, Rootie Technology Pty Ltd, and Jinte Net…

APRA clarifies expectations on commercial property lending

Date: 18 February 2025
Source: Australian Prudential Regulation Authority

The Australian Prudential Regulation Authority (APRA) has issued a letter to authorised deposit-taking institutions (ADIs) to clarify its stance on commercial property lending, particularly concerning pre-sales

Background and Context

In 2016, APRA conducted a thematic review of commercial property lending due to market dynamics and concerns over underwriting standards. This review led to a March 2017 letter where APRA shared its observations, noting that some ADIs had tightened their underwriting criteria for pre-sales coverage in response to settlement risk concerns. Specifically, it was observed that ADIs were generally requiring pre-sales equivalent to at least 100% of committed debt.

Clarification of APRA's Position

The recent letter from APRA clarifies that the reference to pre-sales coverage in the 2017 letter was not intended to set a minimum requirement or expectation. Instead, it was a reflection of industry practices observed during the review. APRA emphasizes that its requirements and guidance for prudent credit risk management in commercial property lending are detailed in APS 220 and APG 220. These standards require ADIs to maintain prudent policies and sound credit assessment and approval criteria, which APRA continues to monitor…

Parliament passes Scams Prevention Framework Bill 2025

Date: 13 February 2025
Source: Parliament of Australia

On 13th February 2025, the Scams Prevention Framework Bill 2025 was passed in both Houses of Parliament. The Bill introduces a new Scam Prevention Framework (SPF) into Part IVF of the Competition and Consumer Act 2010 (Cth) which will apply to social media companies, banks, and telecommunication providers. These service providers will be required to take ‘reasonable steps’ to prevent, detect, report, respond, and disrupt scams while using their services.

It was initially proposed for consultation by the Treasury on 13 September 2024, following data showcasing the increased prevalence and severity of scams which amounted to $2.7 billion in 2023. The design of the SPF will be enforced in a multi-regulator model to deliver a ‘whole-of-ecosystem’ approach to enforcement.

Key features of the Scam Prevention Framework (SPF) include:

  • new SPF principles enforced by the ACCC as an SPF regulator;
  • new SPF sector-specific codes that apply to certain regulated entities;
  • new SPF rules to support the effective operation of the framework;
  • a multi-regulator framework with the ACCC as lead SPF regulator;
  • regulatory and enforcement mechanisms, including a two-tier civil penalty framework; and
  • external dispute resolution mechanisms…

Report of Senate Greenwashing inquiry further delayed until March 2025

Date: 12 February 2025
Source: Federal Parliament

The reporting date for the Senate Standing Committee on Environment and Communications (Committee) inquiry into Greenwashing (Inquiry) has been extended until 28 March 2025.

The Senate referred the inquiry to the Committee in March 2023, with an initial reporting date in December 2023. That was subsequently extended several times and had been due to be provided to the Senate on 12 February 2025.

Submissions to the Inquiry closed in June 2023, with 178 submissions received from a broad range of stakeholders, including regulators, businesses and advocacy groups. Public hearings were held in April and May of 2024.

Information about the Inquiry, including the terms of reference and copies of all submissions, tabled documents and questions on notice is available on the Committee website.

ASIC releases draft regulatory guide on low cost credit contracts

Date: 10 February 2025
Source: ASIC is Australia's integrated corporate, markets, financial services and consumer credit regulator and we serve the Australian community.

The Australian Securities and Investment Commission (ASIC) has released draft Regulatory Guide: Low cost credit contracts (draft RG) together with Consultation Paper 382: Low cost credit contracts (Consultation Paper) for industry and relevant stakeholders to provide feedback on.

This follows the enactment of the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024, which introduces new legal obligations for low cost credit (LCC) providers including Buy Now Pay Later (BNPL) providers under the National Consumer Credit Protection Act 2009 (Credit Act).

The draft RG explains:

  • the circumstances in which the LCC regime applies;
  • the modified responsible lending obligations that credit licensees providing LCCs can elect to comply with; and
  • other modified obligations that apply to LLCs.

The Consultation Paper sets out specific questions on parts of the draft RG, focused on the obligations that are modified for LCCs.

Submissions close 7 March 2025.

ASIC intends to release final guidance in May 2025.

For more information, see ASIC's media release on the consultation for…

Treasury releases draft Buy Now Pay Later regulations for consultation

Date: 7 February 2025
Source: Australian Treasury

The Australian Treasury has released and is inviting feedback on draft National Consumer Credit Protection Amendment (Low Cost Credit) Regulations 2025 (draft Regulations).

The purpose of the draft Regulations is to amend the National Consumer Credit Protection Regulations 2010 to support amendments made by the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 (Cth) to the National Consumer Credit Protection Act 2009 (Cth) and the Credit Code (i.e. Schedule 1 to the Act) to establish a regulatory framework for low cost credit contracts (LCCC), including buy now pay later contracts.

Key provisions of the draft Regulations

The draft Regulations prescribe (among other things):

  • the inquiries that must be made about a consumer’s financial situation before making an assessment of whether a LCCC will be unsuitable for a consumer if the contract is entered, or the credit limit of the contract is increased;
  • requirements for a LCCC licensee’s unsuitability assessment policy, including the content of the policy and conducting reviews of and updating the policy;
  • the maximum level of fees or charges, including default fees a LCCC licensee can…

ASIC Key Issues outlook for 2025: strategic regulatory priorities for the year ahead

Date: 1 February 2025
Source: Australian Securities & Investments Commission

The Australian Securities and Investments Commission (ASIC) has released its "Key Issues Outlook 2025," highlighting what it considers to be the primary challenges and opportunities relevant to its regulatory role for the year ahead and how these tie in with the financial market regulator's strategic priorities.

Volatility in capital markets

ASIC will continue to assess and consult on the adequacy of regulatory frameworks relating to both public and private capital markets to ensure they maintain integrity and adapt to shifting market dynamics. This includes addressing emerging concerns with the growth in private markets which are inherently less transparent. Increased surveillance of private markets will be a focus, in particular, ASIC intends to examine the governance practices of responsible entities in respect of asset valuation and liquidity management.

Superannuation funds and trustees

ASIC will publish the findings of its review into superfund member services and will focus on taking enforcement action where appropriate to ensure that funds meet the changing needs of members as they move from the accumulation to the retirement phase, given the steep rise in…

ASIC initiates proceedings against Swoosh for alleged responsible lending failures and DDO breaches

Date: 29 January 2025
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

The Australian Securities and Investments Commission (ASIC) has initiated civil penalty proceedings in the Federal Court against Ausfinancial Pty Ltd, trading as Swoosh Finance (Swoosh), alleging breaches of responsible lending obligations and design and distribution (DDO) obligations. ASIC contends that Swoosh failed to adequately assess the suitability of credit contracts for 11 consumers and neglected to review its target market determinations (TMDs), despite rising consumer complaints.

The regulator alleges that from October 2019 to October 2024, Swoosh breached both the National Consumer Credit Protection Act 2009 (Cth) (Credit Act) and the Corporations Act 2001 (Cth) (Corporations Act) by:

  • Failing to make reasonable inquiries about consumers’ requirements and objectives or financial situation, and/or failed to take reasonable steps to verify their financial situation before making a credit assessment under s 128 of the Credit Act, in breach of s 130(1) of the Credit Act.
  • Failing to make the inquiries and verification under s 130 of the Credit Act within 90 days before entering into credit contracts, in breach of s 128 of the Credit Act;
  • Failed…

Federal Court imposes $8 million pecuniary penalty on Firstmac for DDO breaches

Date: 28 January 2025
Source: Australian Securities and Investments Commission

Following on from an investigation by the Banking Code Compliance Committee (BCCC) into the adherence by certain banks with the provisions in the Banking Code of Practice (the Code) dealing with deceased estates the Bank of Queensland (BOQ) has been sanctioned for serious and systemic breaches of 190(a)-(c) of the 2019 Code. The BCCC has named and published the details of BOQ’s non-compliance on its website. The breaches involved BOQ and its subsidiary brands, BOQ Specialist and Virgin Money Australia, failing to stop or refund over 2,500 instances of fees and interest incorrectly charged to the estates of deceased customers between 2019 and 2023.

The BCCC noted that the breaches were further compounded by BOQ's delays in identifying and addressing the underlying issues. An internal audit requested by the BCCC in September 2022 revealed significant weaknesses in BOQ's systems, controls, and processes for managing deceased estates. The BCCC acknowledged that the BOQ had introduced some improvements in late 2021, the BCCC found that these were not consistently applied, and the underlying causes were not adequately addressed. The BCCC also criticized…

ASIC issues information sheet 285 alerting BNPL providers to apply for credit licence

Date: 23 January 2025
Source: Australian Securities and Investments Commission (ASIC)

Following the enactment of the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 (Cth) BNPL contracts fall within the scope of the National Consumer Credit Protection Act 2009 and from 10 June 2025 providers of BNPL contracts will need to hold an Australian credit licence.

 

Information Sheet 285 explains (among other things);

  • What constitutes a BNPL contract.
  • What constitutes a low cost credit contract.
  • The requirements under the amended legislation including transitional arrangements.
  • How to apply for an ACL.

Banking Code Compliance Committee sanctions Bank of Queensland for systematic breaches

Date: 20 January 2025
Source: Banking Code Compliance Committee

Following on from an investigation by the Banking Code Compliance Committee (BCCC) into the adherence by certain banks with the provisions in the Banking Code of Practice (the Code) dealing with deceased estates the Bank of Queensland (BOQ) has been sanctioned for serious and systemic breaches of 190(a)-(c) of the 2019 Code. The BCCC has named and published the details of BOQ’s non-compliance on its website. The breaches involved BOQ and its subsidiary brands, BOQ Specialist and Virgin Money Australia, failing to stop or refund over 2,500 instances of fees and interest incorrectly charged to the estates of deceased customers between 2019 and 2023.

The BCCC noted that the breaches were further compounded by BOQ's delays in identifying and addressing the underlying issues. An internal audit requested by the BCCC in September 2022 revealed significant weaknesses in BOQ's systems, controls, and processes for managing deceased estates. The BCCC acknowledged that the BOQ had introduced some improvements in late 2021, the BCCC found that these were not consistently applied, and the underlying causes were not adequately addressed. The BCCC also criticized…

ASIC initiates legal action against HSBC Australia for alleged scam protection failures

Date: 16 December 2024
Source: asic.gov.au

Background

On 13 December the Australian Securities and Investments Commission (ASIC) initiated proceedings against HSBC Bank Australia Limited (HSBC) in the Federal Court, alleging significant failures in protecting customers from scams. According to ASIC, HSBC did not have adequate controls to prevent and detect unauthorized payments and failed to meet its obligations under the ePayments Code .The ePayments Code, which HSBC subscribes to, mandates that banks complete investigations into unauthorized transactions within specific timeframes.

ASIC alleges that by this conduct HSBC failed to ensure that:

  • the financial services covered by its Australian financial services licence were provided efficiently, honestly and fairly (in contravention of its obligations under s 912A(1)(a) of the Corporations Act 2001); and
  • the credit activities authorised by its credit licence were engaged in efficiently, honestly and fairly (in contravention of its obligations under s 47(1)(a) of the National Consumer Credit Protection Act 2009).

ASIC is seeking declarations of contraventions, pecuniary penalties, adverse publicity orders, and costs.

Broader Context and Industry Impact

This legal action comes amid growing concerns about the rising incidence of scams in Australia. In 2023 alone…

AFCA reports on outcome of three-year review program

Date: 9 December 2024
Source: Australian Financial Complaints Authority

Abstract:

The Australian Financial Complaints Authority (AFCA) has completed its three-year program in response to the 13 recommendations made by the 2021 Independent Review of its operations.

The Program, undertaken by Treasury, aimed to bolster the AFCA’s transparency, fairness, and operational effectiveness. Throughout the Program, the AFCA implemented several mechanisms to address the recommendations including:

  • Development of further guidance on how the AFCA approaches issues in complaints.
  • Furthering consultation on the development of AFCA Approach documents.
  • Improved transparency surrounding the role of the AFCA Independent Assessor.
  • Greater clarity of the role of the AFCA and regulators in the identification and investigation of systemic issues.
  • The overhaul of AFCA’s systemic issues and funding models.
  • Development of a new case management system to improve efficiency.
  • Undertaking independent audits of the AFCA’s decision-making process and complaints handling.
  • Updated AFCA Rules and Operational Guidelines.

Read the AFCA’s full media release here and the full report on the outcomes of the Program here.

ASIC issues final stop order for non-compliant credit arrangements

Date: 2 December 2024
Source: asic.gov.au

The Australian Securities and Investments Commission (ASIC) has issued a final stop order against Indy-C-Fashion Accessories Pty Ltd (Indy-C), preventing the company from offering credit arrangements to consumers in its store in Katherine, Northern Territory. 

Breach of Design and Distribution Obligations

ASIC found that Indy-C breached its design and distribution obligations (DDOs) by offering credit arrangements without making a Target Market Determination (TMD). A TMD is a mandatory document to be prepared and made publicly available before engaging in retail product distribution conduct and is required to ensure that financial products, such as credit facilities, are suitable for consumers' needs and objectives.

Even after Indy-C submitted multiple draft TMDs, ASIC determined that if the credit arrangement was distributed as suggested, it would not be reasonable to conclude that consumers receiving the credit arrangement were in the target market.

ASIC Deputy Chair Sarah Court stated that Indy-C provided credit arrangements to First Nations consumers for purchasing clothing and household goods through deductions from their Centrelink benefit payments, without considering whether the credit arrangement was consistent with the consumers' objectives, financial situation, and needs.

This enforcement action…

Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 passed

Date: 1 December 2024
Source: treasury.gov.au
Jurisdiction: Commonwealth

Abstract:

On the 29 November the Australian Parliament passed the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 (Bill) which amends the National Consumer Credit Protection Act 2009 (Cth) (Credit Act) and brings Buy Now Pay Later (BNPL) arrangements into the existing regulatory framework for other credit products.

The Bill makes the following key changes applicable to low cost credit contracts (or LCCCs), which include BNPL arrangements

  • LCCCs will be regulated under the Credit Act and subject to most provisions of the Credit Code (Schedule 1 to the Credit Act).
  • LCCC providers will be required to hold and maintain an Australian credit licence (ACL) and comply with the relevant licensing requirements and licensee obligations. If a LCCC provider holds an ACL to engage in a different kind of credit activity, they may be required to vary their existing licence.
  • LCCC providers will be required to comply with either a modified responsible lending framework or all existing responsible lending obligations in Divs 1-4 of Part 2-3 of the Credit Act. Where providers opt for…

Merger reform Bill passes through Parliament

Date: 29 November 2024
Source: Parliament of Australia

The Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024 (Bill) amending the Competition and Consumer Act 2010 (Cth) has been passed by both houses in the Australian Parliament. It introduces a formal, mandatory, suspensory and administrative merger review system, with the Australian Competition and Consumer Commission (ACCC) as the first instance decision maker on each notified acquisition.

The new regime will come into effect from 1 January 2026 but will also allow for merger parties to start using the new merger regime on a voluntary basis from 1 July 2025. The ACCC is undertaking preparatory work outlined in its recently released Statement of Goals.

A monetary threshold for mandatory notification to the ACCC of an acquisition will be set out in regulations. Once notified, the ACCC will carry out a two-phase decision-making process based on a modified ‘substantial lessening of competition’ test and whether it is satisfied that a public benefit outweighs the public detriment if the acquisition proceeds. The Bill provides for limited merits review of the ACCC’s determination by the Australian Competition Tribunal.

The new merger laws include a focus on serial acquisitions…

Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (Cth)

Date: 29 November 2024
Source: Parliament of Australia
Jurisdiction: Commonwealth

Abstract:

On 28 November 2024 the Parliament passed the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill (Bill) which amends the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 to make changes to Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime.

The Bill extends the scope of the AML/CTF regime to impose AML/CTF obligations including customer due diligence and reporting obligations on real estate professionals, dealers in precious metals and precious stones, and professional service providers, including lawyers, conveyancers, accountants and trust and company service providers (also known as ‘tranche two’ entities). The obligations with respect to tranche 2 entities will commence 31 March 2026.

The Bill as passed includes amendments made in response to recommendations in the final report from the Senate Legal and Constitutional Affairs Legislation Committee’s inquiry into the provisions of the Bill. There are also minor amendments to refine drafting and provide clarity to reporting entities.

Amendments include

  • Excluding barristers from carrying out AML/CTF obligations where they have been instructed by a solicitor. The instructing solicitor would be responsible for carrying out AML/CTF obligations on their client.
  • Introduction of…

APRA and ASIC provide observations on implementation of the FAR by banking industry

Date: 28 November 2024
Source: asic.gov.au

The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have published a letter containing observations on the registration and notification lodgements made by banking entities since the commencement of the Financial Accountability Regime (FAR).

The letter identifies areas that require further consideration by banking entities to ensure compliance with their obligations under the FAR. These areas include:

  • Accountability Statements: Entities should ensure that accountability statements accurately reflect the responsibilities of the accountable person and align with the entity's operations and governance frameworks.
  • Mapping of Responsibilities: Entities should carefully map the responsibilities of accountable persons to ensure there are no gaps or overlaps in accountability.
  • Notification of Changes: Entities should promptly notify APRA and ASIC of any changes to the responsibilities or circumstances of accountable persons, as required under the FAR.

The letter emphasizes the importance of entities reviewing the observations and areas for further consideration to ensure compliance with their FAR obligations.

The publication of this letter demonstrates APRA and ASIC's ongoing monitoring and oversight of the FAR implementation process across the financial services industry. It…

Revised draft rules to expand Consumer Data Right (CDR) to non -bank lenders and narrow the scope of CDR data for banking sector released

Date: 27 November 2024
Source: Treasury.gov.au

On 26 November 2024 Treasury released an exposure draft of the Competition and Consumer (Consumer Data Right) Amendment (2024 Measures No. 2) Rules 2024 (Amending Rules), explanatory materials (EM) and an information sheet for consultation. The release of the Amending Rules follows on from earlier consultations, the most recent in August 2023 which considered expanding the Consumer Data Right (CDR) rules to non-bank lenders (NBLs). If implemented, the Amending Rules will operate to extend the CDR to the NBL sector and narrow the scope of CDR data for the banking and NBL sectors.

The Amending Rules propose revised thresholds for mandatory data sharing by NBLs. A NBL will be categorised as a data holder and will be required to comply with the CDR Rules where the NBL:

  • has a total value of resident loans and finance leases over $1 billion (compared to $500 million under previous proposal) for the preceding calendar month;
  • averages over $1 billion for the previous 12 calendar months; and
  • has more than 1,000 customers (compared to…

ASIC announces 2025 enforcement priorities

Date: 19 November 2024
Source: Australian Securities and Investments Commission

Abstract:

The Australian Securities and Investments Commission (ASIC) has announced its enforcement priorities for 2025 placing particular emphasis on mitigating financial harm to consumers amidst growing cost-of-living pressures. These priorities aim to tackle misconduct that exploits financially vulnerable Australians and uphold market integrity.

Key Enforcement Focus Areas for 2025:

  1. Consumer Protection:
    • Targeting unlawful debt management and collection practices.
    • Addressing business models that evade consumer credit protections.
    • Investigating misconduct in used car financing aimed at vulnerable consumers.
  2. Superannuation, Insurance and Investment Schemes:
    • Focusing on misconduct exploiting superannuation savings.
    • Addressing member service failures within the superannuation sector.
    • Cracking down on fraudulent property investment schemes.
    • Ensuring insurers deal fairly and in good faith with customers.
  3. Financial Market Integrity:
    • Establishing a dedicated internal team to combat insider trading.
    • Strengthening enforcement against market manipulation and breaches of continuous disclosure obligations.
  4. Corporate Compliance Failures:
    • Addressing inadequate cyber-security protections by licensees.
    • Investigating auditor misconduct.
  5. Sustainability and ESG Claims:
    • Targeting greenwashing and misleading conduct in environmental, social, and governance (ESG) claims.

Achievements and Enforcement Actions in 2024:

Last year, ASIC increased investigations by 25% and civil proceedings by…

Treasury flags phaseout of cheques and assurances for continued access to cash payment for essentials

Date: 18 November 2024
Source: Federal Treasury

Abstract:

The Treasurer and Assistant Treasurer and Minister for Financial Services, Jim Chalmers MP and Stephen Jones MP have released a joint statement on the future of physical cash payments and the phasing out of cheques as a form of payment.

The Federal Government intends to ensure that Australian consumers will continue to be able to pay wish cash for essential items, such as groceries and petrol, by introducing a legislative mandate requiring businesses to accept cash tender when selling essential items, subject to some exemptions made for small businesses.

Treasury will conduct industry consultation prior to the end of 2024 to consider the impact on affected businesses and consumers and determine details of the mandate framework. The consultation will also seek input on what further steps are required for cash to remain accessible in an economically sustainable manner.

Details of the legislative mandate will be announced in 2025 and (subject to the outcomes of consultation) it is planned to commence commence from 1 January 2026.

The Government has also released its Cheques Transition Plan, which aims to…

APRA releases climate risk self-assessment survey results for financial sector

Date: 15 November 2024
Source: Australian Prudential Regulation Authority (APRA)

APRA has released the findings from its 2024 climate risk self-assessment survey, providing insights into how banks, insurers, and superannuation trustees are identifying, managing and disclosing climate-related financial risks. APRA urges all entities to consider the survey findings, reflect on their own preparedness and implement leading practice for managing climate risk.

Key Takeaways

  1. Large entities are more progressed than smaller entities in terms of climate risk maturity.
  2. Most large entities showed improved climate risk maturity since 2022 (when APRA’s first climate risk self-assessment survey was conducted), but around one-quarter saw a decline, mainly due to lower self-assessed disclosure maturity.
  3. The average climate risk maturity for large banks improved, while remaining broadly unchanged for insurance and superannuation entities.
  4. Climate governance, strategy, and risk management are areas of comparative strength, while entities reported lower maturity in climate risk disclosure and metrics/targets.
  5. More mature governance structures are typically in place at entities where climate risk has been integrated into risk management.
  6. Entities are beginning to consider adjacent risks and practices such as nature risk and transition plans.

Senate committee report recommends passing Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill

Date: 14 November 2024
Source: Parliament of Australia

On 19 September 2024, the Senate referred the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 (Bill) to the Legal and Constitutional Affairs Legislation Committee for inquiry and report.

The report was released on 13 November 2024 and recommends that the Bill be passed subject to 7 amendments.

Recommendation 1: Move the commencement of the ‘tipping off’ offence from 31 March 2026 to 31 March 2025.

Schedule 5 of the Bill makes amendments to the existing ‘tipping off’ offence. It is currently an offence under the Anti-Money Laundering and Counter-Terrorism Financing Act (Cth) (AML/CTF Act) for a reporting entity to disclose information about a Suspicious Matter Report to anyone other than AUSTRAC: s 123.

Under the new tipping off offence (proposed s 123 of the Bill) it is a requirement that the disclosure of information “would or could reasonably be expected to prejudice an investigation”.

Liability for the new tipping off offence is broader, the Bill if passed will apply to a wider group of persons beyond reporting entities including certain employees both current and former.

Exceptions to the offence…

Introduction of the Scams Prevention Framework Bill 2024

Date: 11 November 2024
Source: treasury.gov.au

On 7 November 2024, following on from two formal rounds of consultation the Scams Prevention Framework Bill 2024 was introduced into the Parliament. If passed, the Bill will introduce a new Part IVF into the Competition and Consumer Act 2010 (Cth) creating a legislative framework called the Scams Prevention Framework (SPF). The SPF is aimed at preventing and responding to scams impacting individuals and small business operators.

The SPF allows the relevant minister to designate certain sectors of the economy as subject to the SPF. Banking services is one of several sectors that the Australian Government has committed to designating as subject to the SPF. The SPF will require Authorised Deposit Taking Institutions (ADIs) to take a variety of actions to combat scams relating to, connected with, or using their services.

The SPF includes the following features:

  • Six overarching principles (governance, prevent, detect, report, disrupt and respond) that apply to all regulated entities, enforced by the Australian Competition and Consumer Commission as the SPF general regulator.
  • Mandatory industry codes setting out sector specific requirements for the service providers in designated sectors. It is proposed that the…

ACCC outlines its approach to rapid transformation in the financial services sector

Date: 1 November 2024
Source: Australian Competition & Consumer Commission (ACCC)

The Australian Competition and Consumer Commission (ACCC) has flagged significant changes in the financial services sector, including rising cost of living pressures and rapid technological advancements, and their implications on competition regulation.

In the keynote address for the Gilbert + Tobin Financial Services Forum, ACCC Chair, Gina Cass-Gottlieb outlined the importance of enforcing competition law, advocacy for merger reform, and advocacy for digital platforms reform including the recommendation of new mandatory competition codes of conduct.

Ms Cass-Gottlieb described the recent introduction of the merger reform bill to Parliament as a significant milestone, committing to approximately 80 per cent of mergers being cleared by the ACCC within 15 to 20 business days. This follows the ACCC’s Statement of Goals issued on 10 October 2024, in which the ACCC promised greater transparency, more efficient process and more certain timelines in merger clearances.

A full transcript of Ms Cass-Gottlieb’s speech is available here.

ASIC commences proceedings against Oak Capital for alleged avoidance of National Credit Code

Date: 31 October 2024
Source: Australian Securities and Investments Commission (ASIC)

ASIC has commenced proceedings in the Federal Court against Oak Capital Mortgage Fund Ltd and Oak Capital Wholesale Fund Ltd (Oak Capital) for allegedly engaging in unconscionable conduct in contravention of s 12 CB of the ASIC Act 2001 (Cth) by implementing and maintaining systems for the purpose of avoiding regulation by the National Credit Code (Schedule 1 of the National Consumer Credit Protection Act 2009 (Cth) (Credit Code).

ASIC alleges that between March 2019 and October 2023, Oak Capital made up to 47 loans totalling over $37 million under a lending model designed to circumvent the Credit Code. The lending model adopted by Oak Capital involved structuring loans which typically required a company borrower, a guarantee from the director(s) of the borrower company supported by security over real property held in the name of the guarantor(s). ASIC alleges that the requirement for a corporate borrower existed in circumstances even where the named company borrower had no discernible interest in the subject of the transaction, was not trading, had no assets or had only been established…

ASIC report calls for better AI governance in the financial services sector

Date: 30 October 2024
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

On 29 October 2024 ASIC released a report titled Beware the gap: Governance arrangements in the face of AI innovation (REP 798) urging financial services and credit licensees to ensure their governance practices keep pace with their increasing adoption of artificial intelligence (AI). The report presents the findings from ASIC’s first review of the governance practices relating to AI of 23 licensees in the retail banking, credit, general and life insurance and financial advice sectors.

 

Key findings

  1. Varied and accelerating AI use: AI use varied significantly across the surveyed licensees. Some have been using forms of AI for several years while others are still early in their journey. However overall, adoption of AI is accelerating rapidly.
  2. Increase in generative AI use: While most current use cases used long-established, well-understood techniques, there is a shift towards more complex and opaque techniques (such as neural networks used in deep learning and generative AI). The use of generative AI, in particular, is increasing exponentially, presenting new risk management challenges.
  3. AI and decision making: AI use was…

Second consultation on Australian sustainable finance taxonomy to commence on 30 October 2024

Date: 25 October 2024
Source: Australian Sustainable Finance Institute

Abstract:

The Australian Sustainable Finance Institute (ASFI) will launch the second and final round of public consultation on the development of an Australian sustainable finance taxonomy on 30 October 2024.

This follows an initial round of consultation that concluded at the end of June (see our earlier update here). ASFI’s summary of the feedback received from the first round consultation is available here.

In the upcoming second round of consultation, ASFI will seek feedback on:

  • the climate change mitigation criteria for all six priority sectors for development:
    • electricity generation and supply
    • minerals, mining and metals
    • buildings;
    • manufacturing and industry;
    • transport; and
    • agriculture and land use;
  • a Do No Significant Harm framework;
  • minimum social safeguards; and
  • the proposed use cases and rule set, comprising advice for how taxonomy users can demonstrate alignment with the taxonomy.

The sustainable finance taxonomy will provide a set of common definitions for sustainable economic activities and assets. The taxonomy will make it easier to identify investment opportunities in sustainable assets and activities, assist in combatting greenwashing by increasing…

AASIC 2024 update

Date: 25 October 2024
Source: ASIC 2024 update

ASIC Commissioner Kate O’Rourke has presented a keynote address at the 34th Annual Credit Law Conference on 24 October 2024.

ASIC’s key focus is on:

  • Improving Consumer Outcomes
    • ASIC's top priority is safeguarding consumers from harmful practices and products in credit and banking sectors.
    • Recent reports examined financial hardship assistance, fee harm in banking, credit card lending practices, and compliance with product design/distribution obligations.
    • Ongoing initiatives focus on reforms to small amount credit contracts, consumer leases, and implementing the enhanced Banking Code of Practice.
    • ASIC is closely monitoring regulatory settings like responsible lending obligations to assess their impact on credit accessibility.
  • Advancing Digital and Data Safety
    • Efforts are underway to combat technology-facilitated misconduct such as scams and oversee the use of artificial intelligence (AI) in financial services.
    • Reviews of major banks highlighted deficiencies in scam prevention strategies, governance frameworks, liability determination approaches, and victim support.
    • ASIC supports the proposed Scams Prevention Framework that will impose anti-scam obligations on banks and other key sectors.
    • Governance frameworks guiding AI implementation by financial services providers are being reviewed, with findings to be released soon.

High Court dismisses SkyCity appeal in relation to Adelaide casino dispute (SkyCity Adelaide Pty Ltd v Treasurer of South Australia)

Date: 24 October 2024
Court: High Court of Australia
Judge(s): Gageler CJ, Gordon, Edelman, Gleeson and Beech-Jones JJ
Judgment date: 16 October 2024
Catchwords: Relief against penalties –Whether obligation under Casino Act 1997 (SA) to pay interest for late payment could be subject of relief against enforcement as penalty.

Abstract:

The High Court has unanimously dismissed an appeal by casino operator SkyCity Adelaide Pty Ltd (SkyCity), and allowed a cross-appeal by the South Australian (SA) Treasurer, against a SA Court of Appeal decision involving a dispute about the interpretation of a Casino Duty Agreement (CDA) and the imposition of interest for late payment of casino duty. The decision provides insight into the principles that apply when interpreting a contract made under a statutory framework and the possible limits of the penalty doctrine in such a context.

 

Background

SkyCity operates electronic gaming machines (EGMs) and automated table games (ATGs) at its Adelaide casino. The Casino Act 1997 (SA) (Casino Act) requires SkyCity to enter into a CDA with the Treasurer governing the calculation and payment of casino duty. A dispute arose…

ASIC cancels Ferratum’s credit licence following CSLR compensation payment

Date: 14 October 2024
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

ASIC has cancelled the Australian credit licence (ACL) of Ferratum Australia Pty Ltd (Fearratum) (in liquidation) after the Compensation Scheme of Last Resort (CSLR) paid compensation on Ferratum's behalf. Ferratum failed to comply with an Australian Financial Complaints Authority (AFCA) determination which ordered Ferratum to pay $1,297.00 to an affected individual. Consequently, on 18 September 2024, the CSLR compensated the individual and informed ASIC.

Following this, on 4 October 2024 ASIC cancelled Ferratum’s credit licence in accordance with Div 6, Subdiv A, s 54(1B) of the National Consumer Credit Protection Act (NCCP Act) which provides that ASIC must cancel an ACL where the CSLR operator compensates a consumer due to a licensee’s failure to meet an AFCA determination. This cancellation process is automatic and not subject to appeal or review.

Ferratum’s licence cancellation is the third instance of such an action by ASIC following a CSLR payment.

For more, see our previous LLU on the other two credit license cancellations here and the ASIC media release here.

Updated Privacy (Credit Reporting) Code released

Date: 3 October 2024
Source: Office of the Australian Information Commissioner

Abstract:

The Office of the Australian Information Commissioner (OAIC) has introduced the updated Privacy (Credit Reporting) Code 2024, strengthening privacy protections for Australians’ credit information. This new version improves how credit providers and reporting bodies handle sensitive credit data, directly affecting individuals' ability to secure loans. Key features include enhanced support for victims of fraud, allowing them to extend credit report bans with minimal proof and receive alerts if credit requests are made during the ban period. The Code also enables individuals to correct multiple inaccuracies in their credit reports following fraud, recognizes domestic abuse as a factor that may impact credit information, and promotes transparency in compliance by credit reporting bodies and banks.

For industry, the revised Code offers greater clarity through practical guidance, examples, and updated definitions. It simplifies compliance by aligning the explanatory materials with other legislative tools, providing clearer definitions for reporting periods and account closure dates. Additionally, a transitional period is offered to allow credit providers time to adjust their systems. These changes aim to boost consumer trust in the credit reporting system, which plays a crucial role…

National Consumer Credit Protection Amendment (Small Business Exemption) Regulations 2024

Date: 3 October 2024
Source: Federal Register of Legislation

The Australian Government has made the National Consumer Credit Protection Amendment (Small Business Exemption) Regulations 2024 which amend the National Consumer Credit Protection Regulations 2010.

The amendments operate to extend an existing exemption from responsible lending obligations for small businesses (being those businesses with fewer than 100 employees or revenue of $5 million or less in the previous financial year) for a further two years.

The exemption allows lenders to provide credit to small businesses without undertaking the prescribed responsilbe lending assessments set out in Chapter 3 of the National Consumer Credit Protection Act 2009, on the proviso that there is a genuine business purpose.

The exemption was initially put in place for a period of 6 months, this current extension will be the fourth and will continue until 3 October 2026.

Click here to view the full text of the National Consumer Credit Protection Amendment (Small Business Exemption) Regulations (2024) Cth.

Click here to view the Explanatory Memorandum.

AUSTRAC releases guidance on identifying suspicious activity for several sectors

Date: 1 October 2024
Source: AUSTRAC

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has released new guidance for several sectors to assist reporting entities in identifying potential money laundering, terrorism financing and other criminal activity. The guidance for each sector includes indicators of suspicious activity, which can inform entities’ transaction monitoring alerts that trigger further review.

AUSTRAC’s guidance on indicators for suspicious activity relates to the following sectors:

  1. Banking
  2. Bookmakers and betting agencies
  3. Casinos
  4. Digital currency (cryptocurrency)
  5. Financial services providers
  6. Life insurance
  7. Non-bank lenders and financiers
  8. Not for profits
  9. Online betting agencies
  10. Remittance service providers
  11. Securities and derivatives
  12. Superannuation industry

For a copy of AUSTRAC’s guidance for each of these sectors, see here.

Federal Court imposes $12.9 million penalty for Vanguard’s misleading claims about ESG exclusionary screens (Australian Securities and Investments Commission v Vanguard Investments Australia Ltd (No 2))

Date: 26 September 2024
Court: Federal Court of Australia
Judges: O’Bryan J
Judgment date: 25 September 2024
Catchwords: CONSUMER LAW – pecuniary penalty for infringement of ss 12DF(1) and 12DB(1)(a) and (e) of the Australian Securities and Investments Commission Act 2001 (Cth) – application of s 12GBA to contravening conduct that commenced prior to 13 March 2019 – application of s 12GBB to contravening conduct that occurs wholly on or after 13 March 2019 – relevant considerations
EVIDENCE – statement of agreed facts tendered in evidence – where agreed facts contained footnote references to documents also tendered in evidence – observations concerning the practice of including documentary references to a statement of agreed facts and the extent to which the practice is permissible under s 191 of the Evidence Act 1995 (Cth)
COSTS – where one party wholly unsuccessful on single issue for which discrete hearing was required but otherwise successful in the proceeding

Abstract:

Vanguard Investments Australia Ltd (Vanguard) has been slugged with a huge $12.9 million fine for greenwashing after misleadingly marketing an investment fund as “ethically conscious”.

Background

Vanguard…

Treasury consultation on electronic trade documents reform

Date: 25 September 2024
Source: The Treasury

Abstract:

The Australian Government is seeking public input on options to implement the Model Law on Electronic Transferable Records (MLETR) in Australia. This model law, developed by the UN Commission on International Trade Law (UNCITRAL), was created to ensure that electronic transferable records are treated with the same legal standing as their traditional paper-based counterparts. Examples of such transferable records include bills of lading, bills of exchange, warehouse receipts, promissory notes, and letters of credit, which are essential for cross-border trade and domestic transactions. These documents allow the possessor to claim goods or money, and historically, they have been processed as paper records.

The consultation, which runs from 16 September to 28 October 2024, is a key component of the government's broader Simplified Trade System (STS) reforms. These reforms aim to streamline and modernise Australia's cross-border trade by reducing the reliance on paper documentation, which can slow down processes, increase costs, and present barriers to efficient trade—particularly for smaller businesses. By confirming the legal validity of electronic transferable records, the Australian Government hopes to promote greater efficiency and security in trade while aligning Australia's legal…

ASIC revokes two credit licences after compensation payouts

Date: 25 September 2024
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

On 24 September 2024, ASIC announced the cancellation of the Australian credit licences of Ultimate Credit Management Pty Ltd (Ultimate Credit) and Worry Free Finance Pty Ltd (Worry Free). This action followed the Compensation Scheme of Last Resort (CSLR) paying compensation to consumers after both companies failed to meet determinations made by the Australian Financial Complaints Authority (AFCA). For context, The CSLR was established in June 2023 and began operations in April 2024, providing compensation of up to $150,000 for consumers who have unpaid AFCA determinations.

In Ultimate Credit’s case, AFCA issued a $500 determination against the company on 6 February 2024, which it did not pay. CSLR compensated the consumer on 14 August 2024, leading ASIC to cancel Ultimate Credit’s licence on 10 September 2024. Similarly, Worry Free Finance failed to pay a $22,001 AFCA determination from 13 February 2022, and CSLR compensated the consumer on 29 August 2024. ASIC cancelled Worry Free’s licence on 12 September 2024. ASIC’s cancellations mark the first-time credit licences have been revoked following CSLR payments.

For more, see ASIC media release here.

ARNECC decides to pause interoperability

Date: 24 September 2024
Source: ARNECC’s decision on interoperability

The ARNECC has announced that it has paused the design, build and test working groups for the Interoperability Program. The announcement can be read here.

ARNECC seeking consultation on Model Operating Requirements Version 7.1 (closes 16 October 2024)

Date: 24 September 2024
Source: ARNECC

ARNECC is consulting on updates to the Model Operating Requirements.

Marked-up, clean, and explanatory notes for the consultation draft are available on ARNECC’s website.

Feedback may be made by email to chair@arnecc.gov.au, and is due by 16 October 2024.

ASIC releases 2023-2024 report on greenwashing misconduct within the financial sector

Date: 23 September 2024
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

The Australian Securities & Investments Commission (ASIC) has released Report 791 which outlines the actions taken by the regulator between 1 April 2023, and 30 June 2024 to address greenwashing in the financial sector.

 

ASIC’s Greenwashing Interventions

ASIC's interventions during the reporting period targeted four main areas of concern:

  1. Inconsistent Underlying Investments: ASIC identified several instances where underlying investments did not align with the ESG (Environmental, Social, and Governance) screens and policies disclosed to investors. This led to significant regulatory actions, including the initiation of two civil penalty proceedings and the finalisation of one, resulting in an $11.3 million penalty against Mercer Superannuation. Additionally, ASIC issued eight infringement notices and secured 37 corrective disclosure outcomes across various sectors, including listed companies, investment managers, and superannuation trustees.
  2. Unsubstantiated Sustainability Claims: ASIC found that several entities made sustainability-related claims without reasonable grounds, leading to potential harm to investors. These claims included overstated environmental impacts and misleading statements about investment exclusions. For example, Future Super was fined for claiming that its entire $400 million fund had been moved…

Consultation on exposure draft legislation for the Scams Prevention Framework opens

Date: 13 September 2024
Source: The Treasury

The Australian Government has released the draft legislation for the implementation of the Scams Prevention Framework (Framework) and its explanatory materials.

The Framework is a multifaceted approach to protect Australian consumers from scams and aims to require service providers to comply with overarching principles regarding:

  • governance arrangements relating to scams; and
  • detecting, reporting, disrupting, preventing and responding to scams.

The Framework involves heavy penalties for non-compliance and pathways for consumers to resolve disputes and seek redress.

The Minister for Financial Services has stated that the Framework will first apply to the banking and telecommunication sectors, as well as digital platform service providers starting with providers of social media, direct messaging services and paid search engine advertising.

The Treasury is seeking submissions on the effectiveness of the draft legislation to implement the Framework and of the draft explanatory materials in explaining the policy context and operation of the proposed new law to stakeholders.

The consultation closes on 4 October 2024.

See the Treasury’s website for more information on the consultation here.

Introduction of the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024

Date: 12 September 2024
Source: AUSTRAC

On 11 September 2024, following on from two formal rounds of consultation the Attorney General introduced the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Amendment Bill 2024 into the Parliament. If passed by the Parliament, the Bill would amend the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth).

In addition to meeting international standards set by the Financial Action Task Force the Bill has three key objectives:

  • To extend the AML/CTF regime to additional services provided by lawyers, accountants, trust and company service providers, real estate professionals and dealers in precious metals and stones.
  • To modernize the regulation of virtual assets and payment technology.
  • To simplify and clarify the regime, reduce regulatory impacts and support businesses to prevent and detect financial crime.

Further detail and analysis with practical takeaways will follow by separate Legal Update.

The Bill and its explanatory materials are available here

High Court rules on pooling order appeal (Morgan v McMillan Investment Holdings Pty Ltd)

Court: High Court of Australia
Judges: Gageler CJ, Edelman, Steward, Gleeson And Beech-Jones JJ
Judgment date: 11 September 2024
Catchwords: Companies - Winding up - Insolvency - Pooling orders - Joint business, scheme or undertaking - Ownership or operation of property - Choses in action

Abstract:

The High Court unanimously dismissed an appeal concerning the requirements for making a pooling order under s 579E(1) of the Corporations Act 2001 (Cth) in relation to two or more companies. The key issue was whether an alleged chose in action to recover proceeds from a sale agreement, arising after companies ceased jointly operating their business, satisfied the “gateway” requirement that "one or more companies in the group own particular property that is or was used, or for use, by any or all of the companies in the group in connection with a business, a scheme, or an undertaking, carried on jointly by the companies in the group".

Facts:

The appellants were the liquidator of two companies, Sydney Allen Printers Pty Ltd (SAP) and Sydney Allen Manufacturing Pty Ltd (SAM), and the companies themselves. SAP and SAM had previously operated…

Mandatory climate reporting legislation is passed by Parliament

Date: 11 September 2024
Source: The Treasury

Abstract:

The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Bill) was passed by Parliament on 9 September 2024 and Royal Assent of the Bill is expected to occur within the next 7-10 days.

Schedule 4 of the Bill introduces a mandatory climate-related reporting regime in Australia that is aligned with global sustainability standards released by the International Sustainability Standards Board. Under the regime, in-scope entities will be required to include climate-related financial disclosures as part of a new annual sustainability report (in addition to the obligations to prepare annual financial reports under Chapter 2M of the Corporations Act).

The disclosure of climate-related financial information will be in accordance with the final version of the Australian sustainability reporting standards (ASRS) set by the Australian Accounting Standards Board (AASB). The AASB will hold a virtual public meeting soon after Royal Asset to consider and vote on the draft ASRS.

The Bill was previously passed by the Senate on 22 August 2024 with an additional amendment to be passed by the House of Representatives. The amendment requires in-scope entities to report against both a…

ASIC enforcement and regulatory update: January to June 2024 (Report 794)

Date: 11 September 2024
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

ASIC has released its Enforcement and Regulatory Update (Report 794), detailing its key actions and policy developments from January to June 2024. The report outlines enforcement and regulatory actions taken by ASIC aimed at strengthening the safety and integrity of the financial system and protecting consumers and includes a regulatory developments timetable and case studies by sector.

 

Consumer Protection

ASIC reinforced its commitment to protecting consumers, especially those vulnerable to financial harm. ASIC noted that it took significant action against entities involved in predatory lending practices, misleading conduct, and greenwashing. For example, ASIC targeted crypto-asset businesses, emphasising the importance of ensuring that providers of financial products have the required Australian Financial Services (AFS) licenses.

The regulator also flagged issues in the superannuation sector, particularly in relation to persistently underperforming investment options that eroded members' savings. ASIC highlighted that that it will soon publish the results of its surveillance into how superannuation funds are handling death benefit claims, reflecting its ongoing focus on accountability in the sector. ASIC also noted that their actions have led to criminal convictions…

Treasury releases final statutory report on meetings and documents amendments

Date: 11 September 2024
Source: The Treasury

Abstract:

The Treasury has recently released its final statutory review report on the amendments to the meetings and documents legislation, examining the impact of changes introduced in 2021 and 2022 through the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 and the Corporations Amendment (Meetings and Documents) Act 2022. These amendments were made in response to the COVID-19 pandemic and aimed to facilitate virtual and hybrid meetings, electronic distribution of meeting-related documents, and technology-neutral document signing and execution

 

Key Findings:

  • Hybrid and Virtual Meetings: The review found that while hybrid meetings are generally well-received, wholly virtual meetings are more contentious. Stakeholders raised concerns about the potential for virtual meetings to diminish transparency and member participation, particularly for listed public companies. However, hybrid meetings, which combine physical and virtual attendance, are viewed positively as they increase accessibility for members who cannot attend in person.
  • Voting and Member Participation: The review emphasised the need for clear communication regarding the format of meetings, especially when using virtual technologies. Companies must ensure that members have a reasonable opportunity to participate, ask questions, and vote in real…

Consultation on the proposed mandatory guardrails for the safe and responsible use of AI in Australia opens

Date: 10 September 2024
Source: Department of Industry, Science and Resources

The Department of Industry, Science and Resources (Department) is seeking feedback on the mandatory guardrails for the use of artificial intelligence (AI) following the release of the proposals paper on “Safe and responsible AI in Australia”.

 

Principles for defining high-risk AI

The consultation will seek feedback on the proposed approach to defining high-risk AI into two broad categories that relate to:

  • uses of AI systems or general-purpose AI (GPAI) models that are known and foreseeable; and
  • advanced and highly capable GPAI models where all possible applications and risks cannot be foreseen.

In designating AI as high-risk based on intended and foreseeable uses, the proposed considerations include the risks of adverse impacts to human rights, health and safety as well as the wider legal, systemic impacts to the broader Australian society, environment, economy and rule of law.

 

Mandatory guardrails for safe and responsible AI use

The 10 proposed mandatory guardrails aim to address harms and risks from AI, provide greater regulatory certainty for businesses and foster public trust. The proposed guardrails would require…

AUSTRAC releases guidance on outsourcing to help meet AML/CTF obligations

Date: 6 September 2024
Source: AUSTRAC

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has released new guidance for reporting entities that use outsourcing to help meet their anti-money laundering and counter-terrorism financing (AML/CTF) obligations. The release of this guidance follows AUSTRAC’s consultation on the draft guidance earlier this year.

AUSTRAC’s guidance provides suggested good practices and recommendations to help reporting entities manage some of the risks that may arise when outsourcing AML/CTF functions to a third party. The guidance covers the following key steps when outsourcing:

  • Identify the risks that may arise through outsourcing, ensuring that any outsourcing of transaction monitoring is based on a thorough ML/TF risk assessment.
  • Conduct due diligence on outsourced service providers.
  • Understand legal restrictions on sharing information with outsourced service providers, including in relation to suspicious matter reporting, tipping off and information received from AUSTRAC.
  • Use a written agreement for outsourcing. The guidance recommends key provisions that should be addressed in outsourcing agreements.
  • Monitor and review ongoing outsourcing arrangements.
  • Document procedures for managing outsourcing arrangements in your AML/CTF program.

For a copy of AUSTRAC’s guidance, see here.

APRA releases Corporate Plan for 2024-25

Date: 5 September 2024
Source: Australian Prudential Regulation Authority (APRA)

APRA has released its corporate plan for 2024 – 2025 (Corporate Plan), setting out the strategic objectives driving its regulatory priorities over the next four years and how it plans to address those priorities. While building on priorities set in previous plans, APRA’s Corporate Plan includes a focus on emerging challenges such as the increased industry-wide reliance on digital technologies, consideration of the financial impacts of climate risk in decision making and meeting the retirement needs of an ageing population.

The Corporate Plan identifies APRA’s three key strategic objectives:

 

Objectives

Key initiatives

Maintaining financial and operational resilience

Adjust capital and liquidity standards to reflect lessons learned from last year’s global banking instability to ensure the prudential framework remains fit for purpose.

Increase minimum standards for operational resilience through the implementation of Prudential Standard CPS 230 Operational Risk.

Maintain a focus on cyber risk management due to heightened risk to system resilience in the operating environment, as well as sophisticated scams that impact the financial well-being of the community.

Treasury Laws Amendment (Consumer Data Right) Act 2024 receives royal assent

Date: 2 September 2024
Source: The Treasury

Abstract:

On 26 August 2024, the Governor-General of Australia granted Royal Assent to the Treasury Laws Amendment (Consumer Data Right) Act 2024 (Amending Act). The Amending Act amends the Competition and Consumer Act 2010 to establish action initiation reforms, enabling consumer data right (CDR) consumers to direct accredited persons to instruct on actions on their behalf, such as making a payment, opening and closing an account, switching providers and updating personal details, using the CDR framework. Previously, the CDR allowed consumers to access and share their data with accredited third parties, primarily for information and comparison purposes.

The Amending Act also

  • outlines the roles and responsibilities of new participants in the CDR regime, including action service providers and accredited action initiators, who will facilitate these actions;
  • grants the Minister extensive powers to define and regulate the types of actions that can be initiated under the CDR regime and to designate the entities that will act as action service providers;
  • enhances privacy and security protections within the CDR framework, introducing new privacy safeguards that are specifically tailored to manage the flow of data during action initiation processes;

ASIC expands strategic priorities in updated Corporate Plan

Date: 27 August 2024
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

ASIC has announced an expanded Corporate Plan, adding a new strategic priority focused on Australia’s public and private markets and emerging financial products. ASIC Chair Joe Longo highlighted that strengthening market integrity is essential for maintaining trust in the financial system, which fosters investment and creates job opportunities. Although Australia's private markets are smaller than its listed equity markets, their lack of transparency poses significant risks, particularly as more investors become involved. The new priority aims to enhance consistency and transparency across all markets and products, signalling tougher regulatory expectations.

Over the past three years, ASIC has undergone significant transformation to sharpen its focus. While the core strategic priorities remain consistent, the updated Corporate Plan reflects the agency’s response to a changing environment. The new structure, implemented last year, enables ASIC to better anticipate and address emerging threats and opportunities, optimising the use of its limited resources. In the last year, ASIC initiated 170 new investigations, a 25% increase, and filed 33 new civil proceedings, a 27% rise, leading to 18 criminal convictions and 23 individuals being charged by the Commonwealth Director of Public Prosecutions.

E-conveyancing - Version 7 of ARNECC Model Participation Rules Guidance Notes published

Date: 27 August 2024
Source: Australian Registrars’ National Electronic Conveyancing Council

Abstract:

Version 7 of the Model Participation Rules (MPR) Guidance Notes has been published by the Australian Registrars’ National Conveyancing Council (ARNECC).

See our earlier updates on 1 March 2024 and 2 February 2024 on version 7 of ARNECC MPR and Model Operating Requirements.

Updates for the Version MPR guidance notes include:

  • Client Authorisation.
  • Verification of Identity.
  • Certifications.
  • Right to Deal.
  • Retention of Evidence.
  • Compliance Examinations.

In addition, new guidance notes have been published for the following:

  • Eligibility Criteria – advising Subscribers on when and how a compliance examination is to take place regarding their compliance with the Version 7 MPR.
  • System Security and Integrity – advising Subscribers on complying with and understanding the system security and integrity obligations as per the Version 7 MPR.
  • Instructing Practitioner Engaging a Subscriber (E-Lodgment Subscriber) – advising Subscribers on the MPR application involving an e-settlement Subscriber in accordance with the Version 7 MPR.

For more information about the Version 7 MPR guidance notes see the ARNECC website.

Mandatory climate reporting requirements and financial regulator powers laws pass the Senate

Date: 23 August 2024
Source: Treasury portfolio

The Treasury Laws Amendment (Financial Market Infrastructure and other measures) Bill 2024 (the Bill) has passed the Senate. The Bill introduces mandatory climate reporting requirements for large listed and unlisted companies and financial institutions commencing on 1 January 2025. Reporting for other large companies will be phased over time according to size and revenue.

The Treasurer has stated that these reform aims to provide investors and companies with clarity and certainty to support net zero transformation and strengthen Australia's reputation as an attractive destination for international capital. The climate reporting reforms are a significant step towards addressing climate risks and promoting investment in cleaner and more sustainable energy sources.

Standardised climate-related financial disclosures will be aligned with international standards to be issued by the Australian Accounting Standards Board (AASB).

Further detailed guidance on the new reporting requirements will be provided shortly however by way of summary:

  • All eligible companies will be required to keep sustainability records.
  • Eligible companies will be required to prepare sustainability reports that include climate statements and notes, any statements required by legislative instrument and a directors’ declaration.

TAS: E-conveyancing now live in Tasmania with first dealings lodged via Property Exchange Australia

Date: 22 August 2024
Source: Tasmanian Government

E-conveyancing has launched in Tasmania, with the first electronic land dealings having been lodged through Property Exchange Australia (PEXA) after PEXA was approved in July to operate as an electronic lodgment network operator.

As of August 2024, Mortgages, Discharges of Mortgages and Lodgement Forms are the registry instruments and documents available for lodging via PEXA. Further instruments and documents, including transfers of land, are anticipated to be available from 2025.

Land Tasmania has a variety of information available on its website for its e-conveyancing reforms, including Reforms to Conveyancing Process, Introduction of Electronic Conveyancing and Electronic Conveyancing. Land Tasmania’s Conveyancing Process for Professionals page has additional specific information on conducting e-conveyancing in Tasmania.

E-conveyancing is now operational in all states and the Australian Capital Territory. The Northern Territory is currently targeting e-conveyancing to be operational in 2025.

For information on e-conveyancing nationally, refer to the Australian Registrar’s National Electronic Conveyancing Council’s website.

Consultation on further extension of small business exemption from responsible lending obligations

Date: 14 August 2024
Source: Treasury.gov.au

The Federal Government has released for consultation draft regulations to extend the small business exemption from responsible lending obligations (RLOs) under the National Consumer Credit Protection Act 2009 (NCCP Act) for another two years until 3 October 2026.

The RLOs set out in Chapter 3 of the NCCP Act and in the National Consumer Credit Protection Regulations 2010 require lenders to give certain documents and information to consumers to assist them in making decisions about dealing with their lender and understanding their rights and the credit services being provided to them. While these obligations generally do not apply to business and commercial lending, they apply to mixed-purpose loans (eg where a small business or sole trader applies for a single loan that may have both personal and commercial benefits) where the predominant purpose is not business-related.

In April 2020, a temporary exemption was introduced to exempt small business loans from RLOs if there is a genuine business purpose that is not minor or incidental. This exemption has been extended three times and is currently set to expire on 3 October 2024. For the purposes of the exemption, a small business is one that has less than 100 employees or revenue of $5 million or less in the previous financial year.

ASIC extends transitional period for foreign financial services providers

Date: 13 August 2024
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

The Australian Securities and Investments Commission (ASIC) has announced a 12-month extension to the transitional relief for foreign financial services providers (FFSPs), allowing them to continue providing financial services to Australian wholesale clients without holding an Australian financial services (AFS) licence. Originally set to expire on 31 March 2025, this relief will now extend until 31 March 2026.

This extension provides certainty to FFSPs relying on the existing relief, allowing them more time to adapt to the upcoming regulatory changes. From 1 April 2025, a new licensing exemption regime, introduced under the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023, is expected to commence, pending its passage through Parliament.

Entities not under current ASIC relief can notify ASIC to use the licensing exemption regime once it commences. FFSPs with a foreign AFS licence can continue operating under their existing ASIC licence.

For more, see the ASIC media release here.

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Senate committee report gives green light to buy now pay later (BNPL) reforms

Date: 9 August 2024
Source: Federal Parliament

Abstract:

The Senate Economics Legislation Committee (Senate Committee) has delivered its report on the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 (Bill), recommending that the Bill be passed.

The Bill was first introduced into Parliament on 5 June 2024 following industry consultation (see our previous update here), and referred to the Senate Committee for inquiry and report on the BNPL and other provisions of the Bill. This update relates only to the BNPL provisions addressed in the Senate Committee report.

In recommending that the Bill be passed, the Senate Committee stated that:

  • it strongly supports the reforms outlined in Schedule 2 of the Bill regulating BNPL products as a form of credit under the National Consumer Credit Protection Act 2009, introducing important consumer protections;
  • It welcomes that BNPL providers would be required to:
    • conduct suitability assessments when providing products over a certain value;
    • obtain an Australian credit license;
    • cap ongoing and late fees; and
    • provide consumers with processes for hardship and dispute resolution;
  • these reforms strike the right balance between reducing potential consumer harm posed by BNPL products while recognising the convenient nature of these products and supporting innovation and competition in the BNPL sector;
  • the final regulations should set appropriate standards in place, and allow for flexibility as BNPL products and the industry develop over time; and

ASIC greenwashing victory against Mercer Superannuation

Date: 8 August 2024
Court: Federal Court of Australia
Judge(s): Horan J
Judgment date: 2 August 2024
Catchwords: Corporations — False and misleading statements — Greenwashing — Pecuniary penalties

Background

The Federal Court of Australia has ordered Mercer Superannuation (Australia) Limited (Mercer) to pay a $11.3 million pecuniary penalty for making false or misleading representations under the Australian Securities and Investments Commission Act 2011 (Cth) (ASIC Act).

Mercer was the trustee of the large Mercer Super Trust superannuation fund (Fund) with almost 300,000 members and around $29 billion in net assets during the relevant period from November 2021 to March 2023. The Fund’s Sustainable Plus Investments were promoted on via statements and videos on Mercer’s website as well as Vimeo and YouTube as excluding investments in companies involved in or deriving profit from alcohol production, gambling operations, and the

However, the court found that, contrary to these representations, six of the seven Sustainable Plus Investments held investments in companies involved in fossil fuel extraction or sale, alcohol production or sale and gambling operations.

Horan J noted that in July 2022, after being alerted by environmental group Market Forces about investments in fossil fuel companies, Mercer had removed some statements referring to "carbon intensive fossil fuels like thermal coal" from its website. However, it did not conduct a full review of the accuracy of all representations about its stated exclusions until after ASIC had commenced proceedings in September 2023.

NSW Court of Appeal confirms when forbearance will constitute valid consideration for a contract (Yi v Park)

Date: 2 August 2024
Court: Court of Appeal – Supreme Court of New South Wales
Judge(s): Bell CJ, Mitchelmore JA and Adamson JA
Judgment date: 31 July 2024
Catchwords: CONTRACTS - formation - consideration - forbearance to sue - requirements for valid forbearance
EVIDENCE - failure to make findings on critical factual issues - effect on establishing consideration

Abstract

In Yi v Park, the Court of Appeal of the Supreme Court of New South Wales unanimously allowed an appeal in relation to a loan agreement, holding that the primary judge failed to make critical findings necessary to establish that the agreement was adequately supported by consideration. The decision illustrates that under established legal principles, forbearance will only constitute good consideration for a contract if there is a presently existing debt owed when the contract is made.

Background

In 2012, a daughter provided funds to her mother to renovate the mother's property, pursuant to an agreement that the daughter would live there rent-free and eventually inherit the property. In 2017, after the mother made a new will contrary to that agreement, the parties entered into a loan agreement documenting the 2012 funds as a $300,000 loan plus $200,000 interest, repayable when the property sold or upon the mother's death.

APLMA publishes Term Sheet (with sustainability-linked loan appendix) and Sustainability Coordinator Mandate Letter

Date: 25 July 2024
Source: Asia Pacific Loan Market Association

Abstract:

The Asia Pacific Loan Market Association (APLMA) has published an updated term sheet (with sustainability-linked loan appendix) and a sustainability coordinator mandate letter for use by market participants.

The term sheet has been updated to include further provisions on margin adjustments and other sustainability-linked loan terms. The updated term sheet reflects the Loan Market Association’s (LMA) draft model provisions for sustainability-linked loans dated 4 May 2023 and the sustainability-linked loan principles jointly published by the APLMA, LMA and LSTA in February 2023.

The sustainability coordinator mandate letter provides for the appointment of sustainability coordinators on a sustainable lending transaction. It may be adapted for use in green, social and sustainability-linked loan mandates.

Both of these documents will continue to be reviewed, and updated as necessary, by APLMA to address market developments.

A copy of these documents is available to APLMA members here.

For more information, see our guidance on Sustainability-linked finance.

American Express fined $8 million for breach of design and distribution obligations (Australian Securities and Investments Commission v American Express Australia Limited)

Date: 19 July 2024
Court: Federal Court of Australia
Judge(s): Jackman J
Judgment date: 19 July 2024
Catchwords: CORPORATIONS — Design and distribution obligations — Target market determinations — Knowledge requirements for review triggers — s 994C, Corporations Act 2001 (Cth) (Corporations Act)

Abstract

The Federal Court has imposed an $8 million penalty on American Express Australia Limited (American Express) for contravening its design and distribution obligations (DDOs) by continuing to issue credit cards despite high cancellation rates suggesting that the target market determinations for these products were no longer appropriate.

Justice Jackman’s judgment provides guidance about the obligations imposed on retail financial product issuers under s 994C of the Corporations Act to review a target market determination when they know, or ought reasonably to know, that the determination is no longer appropriate.

Background

American Express issued the “DJs Amex Card” and “DJs Amex Platinum Card” co-branded with David Jones, which were primarily distributed through David Jones stores. As required by the DDOs in Pt 7.8A of the Corporations Act, American Express made target market determinations (TMDs) for these cards in October 2021.

Banks to refund over $28 million following ASIC investigation

Date: 17 July 2024
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

ASIC has released Report 785 Better banking for indigenous consumers. The report provides findings from an investigation undertaken by ASIC which focussed on the availability and use of basic or low -fee bank accounts by low- income customers, including First Nations people. The investigation revealed that certain banks had been charging high fees to about two million low-income Australians who, under Chapter 15 of the Banking Code of Practice 2021 were entitled to access low- fee accounts. Low-fee accounts have features such as free direct debits and unlimited transactions within Australia with no account keeping fees, free statements and no overdraw or dishonour fees. As a result of the review several major banks have been prompted to refund over $28 million to low-income customers, including many First Nations individuals.

ASIC made the following recommendations to banks participating in their investigation and noted that other banks should take similar steps to identify customers who could benefit from low-fee accounts and implement processes to move customers on low incomes to accounts that better meet their needs.

AUSTRAC releases two national risk assessments on money laundering and terrorism financing

Date: 15 July 2024
Source: Australian Transaction Reports and Analysis Centre (AUSTRAC)

Abstract:

On 9 July 2024, the Australian Transaction Reports and Analysis Centre (AUSTRAC) released two national risk assessments on money laundering and terrorism financing in Australia. AUSTRAC CEO Brendan Thomas emphasized that money laundering is a key enabler of all criminal activity, allowing criminals to reinvest their illegal profits. The assessments, developed with various national and international agencies, offer a comprehensive understanding of these threats and aim to strengthen Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) measures.

The Money Laundering in Australia: National Risk Assessment revealed that traditional methods such as using cash, banks, luxury goods, real estate, and casinos remain popular among launderers, despite the rise of digital currencies. It also noted the significant scale of the domestic drug market, valued at $12.4 billion annually, which fuels money laundering activities.

The Terrorism Financing in Australia: National Risk Assessment found that retail banking, remittance services, and cash exchanges are commonly used to fund overseas terrorist organisations. Additionally, social media and crowdfunding platforms are increasingly being exploited for fund raising.

ASIC and APRA release final rules and guidance for the financial accountability regime (FAR)

Date: 11 July 2024
Source: Australian Securities and Investments Commission (ASIC) and Australian Prudential Regulation Authority (APRA)

Abstract:

The Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) have published the final rules and guidance materials to assist insurers and superannuation trustees in preparing for the commencement of the Financial Accountability Regime (FAR) on 15 March 2025.

Key updates

The key updates in the latest release include:

 

Updated guidance materials

The following guidance materials have also been updated to reflect the amended Regulator rules:

  • An updated information paper (RG 279) to assist entities and their accountable persons in understanding and complying with their obligations under the FAR, reflecting the final list of key functions and their descriptions.

Federal Court finds retail financial product issuer breached design and distribution obligations (Australian Securities and Investments Commission v Firstmac Limited)

Date: 10 July 2024
Court: Federal Court of Australia
Judge(s): Downes J
Judgment date: 10 July 2024
Catchwords: CORPORATIONS — s 994E, Corporations Act 2001 (Cth) (Corporations Act) — design and distribution obligations — obligation to take “reasonable steps” that are “reasonably likely” to result in conduct consistent with target market determination

Abstract

The Federal Court has found that Firstmac Limited (Firstmac) contravened its design and distribution obligations (DDOs) in s 994E of the Corporations Act by failing to take reasonable steps in relation to the distribution of its “High Livez” investment product.

The case provides important guidance on the steps that retail financial product issuers must take to comply with the DDOs in Pt 7.8A of the Corporations Act. In particular, the decision clarifies the scope of the obligation on product issuers to “take reasonable steps that will, or are reasonably likely to” result in their conduct being consistent with the product’s target market determination.

Background

Firstmac is a non-bank lender that offered various financial products to retail clients between October 2021 and September 2022, including term deposits and a unit trust investment product known as “High Livez”.

BCCC sanctions ANZ for breaching Banking Code of Practice

Date: 5 July 2024
Source: Banking Code Compliance Committee

Abstract:

The Banking Code Compliance Committee (BCCC) has sanctioned ANZ for systemic breaches of the Banking Code of Practice. From July 2019 to September 2023, ANZ failed to stop or refund fees for deceased estates and did not respond to representatives within the required 14 days. The BCCC highlighted the seriousness of these breaches, noting that ANZ took over a year to implement solutions after identifying the issues in early 2022, and nearly two years to start customer remediation, which is ongoing and expected to be completed by the end of July 2024.

ANZ's remediation efforts, involving payments to affected estates, were criticized for their lack of urgency and completeness. The BCCC's decision to publicly name ANZ was a decision chosen to reflect the severity of the non-compliance and aims to promote transparency and accountability within the banking sector.

For more, see the full BCCC investigation here and BCCC media release here.

Federal Court orders Ferratum to pay $16m for contravention of NCCP Act

Date: 1 July 2024
Court: Federal Court of Australia
Judge(s): Kennet J
Judgment date: 28 June 2024
Catchwords: National Consumer Credit Protection Act 2009 (Cth)— small amount credit contracts — prohibited fees— assessment of pecuniary penalties.

Abstract

Following on from declarations made by the court in respect of contraventions by Ferratum Australia Pty Ltd (in liq) (Ferratum) of s 24 of the Consumer Credit Code (Code) and s 47 of the National Consumer Credit Protection Act 2009 (Cth) (NCCP Act) the court has now ordered Ferratum to pay to the Commonwealth pecuniary penalties totally $16m.

In deciding appropriate penalties the court noted that while Ferratum’s contraventions of the Code concerned very small amounts of money, they were persistent and systemic (continuing in the face of attention from the Australian Securities and Investments Commission) and affected vulnerable consumers. It was noted that Ferratum’s corporate culture had significant short comings in relation to compliance with the statutory requirements in the NCCP Act and Code and this was considered an aggravating feature of the case.

The court was of the view that the need for deterrence justified penalties at these levels.

Read the full text of the court’s judgment here: Australian Securities and Investments Commission v Ferratum Australia Pty Ltd (in liq) (No 2) [2024] FCA 701 (fedcourt.gov.au)

Treasurer approves ANZ/Suncorp acquisition subject to conditions

Date: 28 June 2024
Source: Treasury

ANZ Banking Grup (ANZ) and Suncorp Banking Group (Suncorp) have received final approval from Treasurer Jim Chalmers in ANZ’s proposed acquisition of Suncorp’s banking arm.

The proposed acquisition by ANZ of SBGH Ltd (SBGH), which owns Suncorp-Metway Ltd (Suncorp Bank) has been under consideration by Treasury under the Financial Sector (Shareholdings) Act 1998 (Cth) since the application was lodged on 26 March 2024.

Consulting APRA, ASIC, the ACCC and Department of Home Affairs, Treasury advised that it would not be in the national interest to prohibit the transaction.

The approval is subject to conditions, including:

  • no changes to the total number of Suncorp Bank branches in Queensland for at least three years;
  • no regional ANZ branches closed Australia-wide for three years;
  • no regional Suncorp Bank branches closed Australia-wide for three years;
  • Suncorp Bank to renew its current agreement with Australia Post for the provision of Bank@Post services for a minimum of three years; and
  • *ANZ to make best endeavours to join Bank@Post on commercial terms for a minimum of three years.

The proposed acquisition, which the parties reached agreement of in July 2022, can proceed subject to commencement of legislation modifying the State Financial Institutions and Metway Merger Act 1996 (Qld) which was designed to allow for the ANZ/Suncorp merger under Queensland law.

Westpac sanctioned for breaching Banking Code in branch closure

Date: 27 June 2024
Source: Banking Code Compliance Committee (BCCC)

Abstract:

On 25 June 2024, the Banking Code Compliance Committee (BCCC) sanctioned Westpac Bank for serious and systemic breaches of the Banking Code of Practice. The investigation revealed that Westpac failed to adhere to the Australian Banking Association’s Branch Closure Protocol and its obligations under the Banking Code following the closure of its Tennant Creek branch in the Northern Territory in September 2022.

The BCCC's findings indicated that Westpac did not provide sufficient support to customers, particularly in assisting them with alternative banking services, engaging with the community, and addressing concerns promptly. This failure had a significant adverse impact on the Tennant Creek community, especially vulnerable customers such as the elderly and those with limited English proficiency.

BCCC Chair, Ian Govey AM, criticized Westpac's inadequate response and highlighted that the bank's actions were not only insufficient but also disproportionately affected vulnerable customers. The BCCC's decision to publicly sanction Westpac is the most severe measure it can impose and reflects the seriousness of the bank's failures.

This decision serves as a warning to the banking industry about the consequences of non-compliance with the Code and the critical need to consider customer needs during branch closures.

For more, see the BCCC media release here.

ASIC validates improved Banking Code of Practice

Date: 27 June 2024
Source: Statutory Review of the Meetings and Documents Amendments – consultation

Abstract:

On 27 June 2024, the Australian Securities and Investments Commission (ASIC) approved a revised version of the Australian Banking Association’s (ABA) Banking Code of Practice, set to commence on 28 February 2025. This update follows extensive consultations led by ASIC to address critical gaps and enhance consumer and small business protections.

Key improvements in the new Code include expanding the definition of a small business to include those with up to $5 million in aggregate borrowings, improving inclusivity and accessibility for customers, introducing new provisions for deceased estates, expanding the definition of financial difficulty, and strengthening protections for loan guarantors. ASIC emphasized maintaining crucial protections, such as the requirement for banks to act with diligence and prudence. Moreover, provisions for handling consumer complaints and robust oversight by the Banking Code Compliance Committee remain intact, with banks now formally bound by their obligations under the Banking Code Compliance Committee Charter.

ASIC Chair Joe Longo asserted that while the new Code introduces material enhancements, it is not the final step in promoting customer-focused banking. He stressed the importance of banks continually improving consumer outcomes, particularly for vulnerable and Indigenous customers, through data insights and ongoing efforts.

ASIC's approval follows a 2021 independent review and public consultations from November 2023 to January 2024. The new Code will be available on the ABA’s website before its commencement.

For more, see the ASIC media release here.

Treasury establishes panel to review the meeting and documents amendments to the Corporations Act 2001

Date: 25 June 2024
Source: Statutory Review of the Meetings and Documents Amendments – consultation

The Assistant Treasurer and Minister for Financial Services, the Hon Stephens Jones MP has established a panel to conduct the statutory review of the meetings and documents amendments made to the Corporations Act 2001 (Cth) by Schedule 1 of the Treasury Laws Amendment (2021 Measures No.1) Act 2021 and the Corporations Amendment (Meetings and Documents) Act 2022.

The panel will review the effects of the amendments allowing online meetings, electronic exercise of voting rights and electronic document execution and distribution on supporting the effective operations of companies. The panel will review the flexibility, cost and effectiveness of these amendments.

The panel is calling for written submissions from interested parties by 19 July 2024. The panel’s final report on the outcome of their review is due to the Government by 14 August 2024.

For more information see the Statutory Review of the Meetings and Documents Amendments Consultation paper.

Federal Government releases Australia’s sustainable finance roadmap

Date: 19 June 2024
Source: Treasury

Abstract:

Following consultation in late 2023, the Federal Government has released Australia’s sustainable finance roadmap, setting out its vision for the implementation of key sustainable finance reforms and related measures.

The sustainable finance roadmap provides important clarity on the steps to achieving Australia’s sustainable finance policy objectives and supports the development of sustainable finance markets in Australia. The roadmap includes 10 policy priorities across three pillars as follows:

Pillar 1: Improve transparency on climate and sustainability

  1. Implementing climate-related financial disclosures
  2. Developing the Australian Sustainable Finance Taxonomy
  3. Supporting credible net zero transition planning
  4. Developing sustainable investment product labels

Pillar 2: Financial system capabilities

  1. Enhancing market supervision and enforcement
  2. Identifying and responding to systemic financial risks
  3. Addressing data and analytical challenges
  4. Ensuring fit for purpose regulatory frameworks

Pillar 3: Australian Government leadership and engagement

  1. Issuing Australian sovereign green bonds
  2. Stepping up Australia’s international engagement

A copy of the sustainable finance roadmap is available here.

Consultation on Australian sustainable finance taxonomy to close on 30 June 2024

Date: 18 June 2024
Source: Australian Sustainable Finance Institute

Abstract:

The Australian Sustainable Finance Institute (ASFI) has launched the first round of public consultation on the development of an Australian sustainable finance taxonomy. For the first round of consultation, ASFI is seeking feedback on:

  • the draft headline ambitions for the Australian taxonomy’s environmental objectives; and
  • the draft climate change mitigation criteria for the first three priority sectors under development, being:
    • electricity generation and supply;
    • minerals, mining and metals; and
    • construction and the built environment.

The sustainable finance taxonomy will provide a set of common definitions for sustainable economic activities and assets. The taxonomy will make it easier to identify investment opportunities in sustainable assets and activities, assist in combatting greenwashing by increasing the transparency and comparability of sustainable investments, and ultimately drive capital flows to support Australia’s climate, environmental and social objectives.

Consultation is open until 30 June 2024. A copy of the consultation paper is here.

APRA releases finalised guidance on new Prudential Standard CPS 230 Operational Risk Management

Date: 14 June 2024
Source: Australian Prudential Regulation Authority (APRA)

APRA has published its finalised Prudential Practice Guide CPG 230 Operational Risk Management (Practice Guide) intended to help banks, insurers and superannuation trustees implement Prudential Standard CPS 230 Operational Risk Management (CPS 230), which takes effect from 1 July 2025.

CPS 230 aims to ensure that APRA regulated entities (entities) are resilient to operational risk and disruptions. CPS 230 requires entities to effectively manage operational risk, maintain critical operations through severe disruptions and manage risk associated with the use of service providers.

The finalised Practice Guide has been updated to address feedback from submissions to the first draft and has been simplified to align more closely with CPS 230.

In response to submissions on the draft Practice Guide, APRA has announced key changes including:

  • Non-Significant Financial Institutions will have a further 12 months to comply with certain business continuity and scenario analysis requirements in CPS 230; and
  • APRA’s three-year supervision programme to support implementation.

Entities should be actively working on transitioning to CPS 230. APRA has included a day one checklists to assist entities in preparing for compliance with CPS 230.

For further information on the transition to CPS 230, see APRA’s website. The final Practice Guide is published here and CPS 230 is published here.

Court determines lender’s offer letter not a standard form contract and outside scope of UCT regime in DCZ Early Learning v Semper Mortgage Management

Date: 12 June 2024
Court: Supreme Court of Queensland
Judge(s): Freeburn J
Judgment date: 7 June 2024
Catchwords: Unfair contract terms-standard form contract-letter of offer

Abstract

An indicative letter of offer (Offer letter) was determined to be outside the scope of the unfair contract terms (UCT) regime because the Offer letter was not a ‘standard form contract’ for the purposes of s 12BA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

Certain boilerplate contract terms which imposed liability on potential borrowers for various fees at the time of signing the Offer letter (regardless of whether a loan was made) were considered not to be unfair under s 12BG of the ASIC Act.

Background

DCZ Early Learning Pty Ltd (DCZ) as borrower signed an Offer letter issued by Semper Mortgage Management Pty Ltd (Semper) as lender for the purpose of obtaining funding to assist with the purchase of a childcare business. The loan did not proceed.

Under the terms of the Offer letter DCZ was liable to pay Semper various fees including establishment fees, administration fees and broker fees. The liability to pay the relevant fees arose at the time the Offer letter was signed.

Land registry and ELNO fee updates from 1 July 2024

Date: 7 June 2024
Source: VIC Land Use Victoria | NSW LRS | QLD Titles Queensland | WA Landgate | SA Land Services | TAS Titles Office | ACT Access Canberra | NT Land Titles Office

Land registries across the country have updated their fees from 1 July 2024. ELNOs, PEXA and Sympli, have also updated their pricing. Details below.

New South Wales | Land Registry Services

New fees payable from 1 July 2024 to 30 June 2025 are listed here on the LRS website.

Victoria | Land Use Victoria

New fees payable from 1 July 2024 to 30 June 2025 are listed here on the LUV website.

Queensland | Titles Queensland

New fees payable from 1 July 2024 to 30 June 2025 are listed here on Titles Queensland website.

Western Australia | WA Landgate

New fees payable from 1 July 2024 to 30 June 2025 are listed here on WA Landgate website.

South Australia | Land Services

New fees payable from 1 July 2024 to 30 June 2025 are listed here on the Land Services website.

Tasmania | Land Titles Office

New fees payable from 1 July 2024 to 30 June 2025 are listed here on the Land Titles Office website.

Australian Capital Territory | Access Canberra

New fees will be payable from 1 July 2024, and will be listed here on the Access Canberra website from 1 July 2024.

Bill to regulate BNPL industry under consumer credit regime introduced into Parliament

Date: 5 June 2024
Source: The Hon Stephen Jones MP

The Government has introduced into Parliament new legislation to protect consumers of Buy Now Pay Later (BNPL) services by extending the application of the National Consumer Credit Protection Act 2009 (Cth) (Credit Act) to provisions of credit under BNPL arrangements.

Unlike other forms of credit such as loans and credit cards, most BNPL services are not presently covered by the Credit Act are not subject to the same consumer protections nor offer the same access to effective hardship and dispute resolution processes.

The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 (Cth) (Bill) would:

  • amend the Credit Act to require BNPL providers to hold an Australian credit licence;
  • require BNPL operators to comply with existing credit laws regulated by ASIC; and
  • establish a new “low cost credit” category under the Credit Act that acknowledges the low risk and cost of BNPL in comparison to other regulated credit.

The reforms balance the recognised impact of the BNPL industry on boosting competition within credit markets with consumer protection and their ability to access to small amounts of credit and were subject to industry consultation by Treasury in March and April of this year.

APLMA publishes model provisions for green loans

Date: 3 June 2024
Source: Australian Securities and Investments Commission

Abstract:

The Asia Pacific Loan Market Association (APLMA) has published model provisions for green loans to be included in APLMA recommended forms of facility agreement for lending transactions involving a “green facility” and a “green loan”. The model provisions can also be adapted for “social loans”.

APLMA acknowledges that while there is currently no settled approach to the requirements of green loans in Asia Pacific loan markets, the model provisions are designed to provide a starting point for parties in a green loan transaction, subject to case specific customisation and negotiation.

A copy of the model provisions for green loans is available to APLMA members here.

For more information regarding green loans, see our Guidance Note: Green loans and social loans.

ASIC Commissioner indicates ASIC’s compliance priorities

Date: 29 May 2024
Source: Australian Securities and Investments Commission

Abstract:

Australian Securities and Investments Commission (ASIC) Commissioner Alan Kirkland has outlined ASIC’s compliance priorities for the financial services field in a speech delivered to the Australian Finance Industry Association Risk Summit 2024. The areas of focus are centred on key issues affecting consumers including the rising cost of living, climate change and technological advancement.

With these areas in mind, ASIC will target behaviours affecting consumers such as:

  • home loan lenders’ compliance with financial hardship obligations (following the findings revealed in a review of practices of 10 large lenders);
  • high-cost credit facilities and predatory lending practices;
  • misconduct in used car financing; and
  • misconduct impacting First Nation people and vulnerable consumers.

ASIC is also focused on how corporations deal with technological risk relating artificial intelligence, cyber security and financial scams.

See the full text of the speech here.

ASIC succeeds in case against BSF Solutions and Cigno Australia

Date: 28 May 2024
Court: Federal Court of Australia
Judge(s): Jackman J
Judgment date: 24 May 2024
Catchwords: Consumer Law-National Consumer Credit Protection Act- credit activity without a licence-charges made for providing credit
Consumer Law- accessory liability-directors actual knowledge of essential facts

Abstract:

BSF Solutions Pty Ltd (BSF) and Cigno Australia Pty Ltd (Cigno) each contravened s 29(1) of the National Consumer Credit Protection Act 2009 (Cth) (Act) by engaging in credit activities without holding an Australian Credit Licence (ACL). The directors of BSF and Cigno were involved in the contraventions and accordingly by virtue of s 169(b) of the Act, they themselves also contravened s 29(1). The court ordered that so long as each of BSF, Cigno and their respective directors do not hold an ACL they be permanently restrained from demanding, receiving or accepting fees, charges or other amounts from consumers (including amounts of principal) in respect of certain loan and related service agreements entered into.

AUSTRAC and SkyCity agree to proposed $67M penalty for AML breaches

Date: 21 May 2024
Source: Australian Transaction Reports and Analysis Centre

Abstract:

SkyCity Adelaide Pty Ltd (SkyCity) and AUSTRAC have agreed to a proposed $67 million penalty for breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) in joint submissions filed with the Federal Court of Australia.

SkyCity has admitted to contravening the AML/CTF Act by failing to meet AML/CTF program requirements, in contravention of section 81, and neglecting ongoing due diligence for higher risk customers and transactions, in contravention of section 36. AUSTRAC CEO Brendan Thomas emphasized the severity of SkyCity's unchecked high-risk practices, stressing the importance of stringent compliance within the gaming sector to mitigate money laundering and terrorism financing risks.

A court hearing is set for 7 June 2024, where Justice Lee will review the proposed settlement to determine the appropriate penalty.

For more, see the AUSTRAC media release here.

ASIC report calls for better hardship support from lenders

Date: 20 May 2024
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

On 20 May 2024, ASIC released a report titled Hardship, hard to get help: lenders fall short in financial hardship support (REP 783), highlighting shortcomings among home loan lenders in supporting Australians facing financial difficulties. Overall, the report found that lenders need to do more to ensure that customers are consistently and appropriately supported.

The review of ten large home lenders revealed that 35% of Australians abandoned the financial assistance application process and 40% of customers who received assistance fell into arrears immediately after the assistance period ended. Poor practices highlighted in the report included:

  • lenders not making it easy for customers to give a hardship notice;
  • assessment processes being difficult for customers;
  • lenders not communicating effectively with customers; and
  • vulnerable customers often not being well supported.

The report found that lenders often adopted standardised approaches to hardship requests, had unduly burdensome assessment procedures, and provided inadequate support for vulnerable customers, including those experiencing family violence. Seven of the reviewed lenders had improvement programs in place, but ASIC stressed that material improvements are needed. Lenders are expected to prepare specific plans to address the issues raised in the report.

Legislation amending subsidiary disclosure and thin cap rules passes Parliament and gains Assent

Date: 13 May 2024
Source: Federal Parliament

Abstract:

The Federal Parliament has recently passed the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share - Integrity and Transparency) Bill 2023 (Cth) (Bill), which will introduce major reforms in the “thin capitalisation” taxation regime. The Bill received Royal Assent to become the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share - Integrity and Transparency) Act 2024 (Cth) on 8 April 2024. These changes to the Income Tax Assessment Act 1936 (Cth) , Income Tax Assessment Act 1997(Cth) and the Taxation Administration Act 1953 (Cth) are set to align with the Organisation for Economic Co-operation and Development's (OECD) best practices, particularly OECD BEPS Action 4, and will take effect from income years commencing on or after 1 July 2023. The amendments target multinational entities operating in Australia, introducing stricter measures to limit interest deductions and enhance transparency in financial reporting.

The Bill also amends the Corporations Act 2001 (Cth) to introduce requirements for Australian public companies to disclose information on subsidiaries in their annual financial reports by providing a way a consolidated entity disclosure statement.

Appeal upheld: NSW Court of Appeal examines unconscionable conduct in Wakim v Senworth Capital Pty Ltd

Judge(s): White JA, Basten AJA and Griffiths AJA
Judgment date: 10 May 2024
Catchwords: — setting aside default judgment — loan guarantee — reasonably arguable defence — unconscionable conduct — Contracts Review Act 1980 (NSW) — undue influence — lack of independent advice — leave to appeal granted — appeal upheld

Abstract:

In Wakim v Senworth Capital Pty Ltd [2024] NSWCA 102; BC202405806, the NSW Court of Appeal grants Mrs Wakim leave to appeal finding that her case raised important legal issues regarding unconscionable conduct and the Contracts Review Act 1980 (NSW) (CR Act). The court upheld the appeal because the primary judge erred by relying solely on Kakavas v Crown Melbourne (2013) 298 ALR 35; [2013] HCA 25; BC201302838 (Kakavas) and not considering subsequent relevant case law, and by failing to adequately consider Mrs Wakim’s reasons for her delay in filing the defence. Additionally, White JA highlighted that Mrs Wakim may be entitled to relief under principles from Garcia v National Australia Bank Ltd (1998) 155 ALR 614; (1998) 23 Fam LR 575; [1998] HCA 48; BC9803588 (Garcia) and Yerkey v Jones (1939) 63 CLR 649; [1939] ALR 62; (1939) 13 ALJR 84; BC3900003 (Yerkey).

APLMA publishes Australian real estate finance facility agreement

Date: 7 May 2024
Source: Asia Pacific Loan Market Association (APLMA)

Abstract:

The Asia Pacific Loan Market Association (APLMA) has published an Australian real estate finance facility agreement for use in multi-property secured syndicated real estate investment transactions.

APLMA has developed this document specifically for Australian market conditions (including the Australian real estate investment trusts (REIT) sector) but with regard to the equivalent English Loan Market Association (LMA) documentation. This document is suitable for syndicated facilities in the Australian market provided to investment grade corporates.

A copy of the Australian real estate finance facility agreement is available to APLMA members here.

Federal Court’s first ruling against a non-cash payment facility involving crypto

Court: Federal Court of Australia
Judge(s): Downes J
Judgment date: 3 May 2024
Catchwords: s 911A of the Corporations Act 2001 (Cth) contraventions — exemptions from holding an Australian Financial Services Licence — non-cash payment facility — digital currency and crypto assets — authorised representative — financial product and financial product advice — ss 12DA and 12DB of the Australian Securities and Investments Commission Act 2001 (Cth) contraventions — promotion of non-cash payment facility involving crypto — false or misleading representations —misleading or deceptive conduct of the Corporations Act 2001 (Cth) contraventions — unauthorised customer account withdrawals — lack of adequate systems to prevent or detect fraudulent transactions by third parties — liability — agreed penalty — regulator standing to enforce civil penalty provisions for failure to have appropriate controls in place by financial services providers

Abstract:

In proceeding brought by the Australian Securities and Investments Commission (ASIC), the Federal Court has declared that BPS Financial Pty Ltd (BPS) contravened s 911A(1) and 911A(5B) of the Corporations Act 2001 (Cth) (Corporations Act) and ss 12DA(1), 12DB(1)(a) and 12DB(1)(e) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) in respect of a non-cash payment facility that relates to the “Qoin” crypto-asset tokens and digital wallets (together as “Qoin Facility”), which BPS established in 2020.

ASIC Chair outlines the regulator’s roadmap on greenwashing and sustainable finance reform

Date: 3 May 2024
Source: Australian Securities and Investments Commission

Joe Longo, the Chair of the Australian Securities and Investments Commission (ASIC) has delivered a speech at the Responsible Investment Association Australasia (RIAA) elaborating on the regulator’s approach to greenwashing and sustainability representations.

Greenwashing is misleading or deceptive conduct

Mr Longo reiterated prior statements by both the ACCC and ASIC and by the courts, that “greenwashing” is by no means a new concept, but simply a manifestation of misleading or deceptive conduct that has recently entered the spotlight. Likewise, he emphasised that the obligation for sustainability-based claims to be accurate and able to be substantiated and founded on reasonable grounds applies equally to all kinds of representations and information provided to markets and investors.

Second stage consultation on reforming Australia’s AML/CTF regime

Date: 3 May 2024
Source: Progressing reforms to Australia’s anti-money laundering and counter-terrorism financing laws

On 2 May the Attorney-General's Department (A-G) announced the commencement of the second stage of consultation on reforming Australia's anti-money laundering and counter-terrorism financing (AML/CTF) regime, the key requirements of which are currently set out in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the Act).

The second stage consultation includes the release of detailed reform proposals outlined in several consultation papers published on the A-G's website. The reforms aim to extend the scope of the existing AML/CTF legislation to high-risk sectors including lawyers, accountants, trust and company service providers, real estate agents and dealers in precious metals and stones.

Review of Australia’s credit reporting framework

Date: 29 April 2024
Source: Attorney-General's Department

On 26 April 2024 the Australian Government released an issues paper inviting feedback on the performance of Australia’s credit reporting framework for the purpose of developing recommendations for government to improve the framework’s overall operation.

The issues paper forms part of an independent statutory review of:

  • credit reporting provisions in Part 111A of the Privacy Act 1988 (Cth); and
  • mandatory credit reporting provisions in Part 3-2CA of the National Consumer Credit Protection Act 2009 (Cth).

The paper canvases issues including:

  • whether to expand mandatory credit reporting to all credit providers, including but not limited to smaller ADIs, non- bank lenders, BNPL providers, pay day lenders and consumer lessors;

ASIC orders retailer to end Centrepay credit arrangements

Date: 26 April 2024
Source: Australian Securities & Investments Commission (ASIC)

The Australian Securities and Investments Commission (ASIC) has ordered that Coral Coast Distributors (Cairns) Pty Ltd (Coral Coast) can no longer sign up customers into credit agreements for purchases through Centrepay deferred deductions arrangements in its Urban Rampage stores. This is the first time ASIC has issued a final stop order under the design and distribution obligations (DDO) regime.

ASIC previously made an interim stop order preventing Coral Coast from entering into new credit agreements via Centrepay. The stop order was initially in place for 21 days, before being extended while an ASIC delegate made a final determination.

As the deferred deduction arrangements constituted a credit facility, Coral Coast was required to comply with obligations under the DDO regime, contained in Pt 7.8A of the Corporations Act 2001 (Cth).

Federal Court orders Macquarie Bank to pay $10M penalty for unauthorised customer account withdrawals

Date: 22 April 2024
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

Macquarie Bank Ltd (Macquarie) has been ordered by the Federal Court to pay a $10 million penalty for its failure to establish effective controls preventing unauthorised fee transactions by third parties on customer accounts in contravention of s 912A(1)(a) and (5A) of the Corporations Act 2001 (Cth).

The Federal Court found that, between 1 May 2016 and 15 January 2020, Macquarie had failed to implement effective controls to prevent or detect transactions conducted by third parties through Macquarie’s bulk transacting system, which were outside the scope of their authority that only permitted them to withdraw their fees from their client’s Cash management accounts, such as the fraudulent transactions made by financial adviser, Ross Hopkins.

ASIC appeals Federal Court decision against finding of unfair contract terms in Auto & General’s insurance contracts

Date: 19 April 2024
Source: Australian Securities and Investments Commission

The Australian Securities and Investments Commission (ASIC) has appealed the Federal Court’s decision to dismiss proceedings against Auto & General Insurance Co Ltd (A&G) in relation to alleged unfair contract terms under the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

ASIC had alleged that a term in A&G’s insurance contracts was unfair for requiring policyholders to notify it if “anything changes about your home or contents” and that a failure to provide a notification may allow A&G to reduce or refuse to pay claims, cancel or not offer to renew their contracts.

The Federal Court dismissed ASIC’s claims under ss 12BF and 12BG of the ASIC Act. The primary judge construed the term as imposing an obligation on the policyholder to notify A&G if there is any change to the disclosed information about their home or contents prior to entry into the contract.

Federal Court finds Sunshine Loans charged prohibited amendment or rescheduling fees in SACC loans (Australian Securities and Investments Commission v SunshineLoans Pty Ltd (No 2))

Date: 15 April 2024
Court: Federal Court of Australia
Judge(s): Derrington J
Judgment date: 12 April 2024
Catchwords: s 47(1)(d) National Consumer Credit Protection Act 2009 (Cth) and ss 24(1A)(a) and (b) National Credit Code contraventions — small amount credit contracts — permitted fees — liability — regulator standing to enforce civil penalty provisions in the National Credit Code of the Corporations Act 2001 (Cth) contraventions — unauthorised customer account withdrawals — lack of adequate systems to prevent or detect fraudulent transactions by third parties — liability — agreed penalty — regulator standing to enforce civil penalty provisions for failure to have appropriate controls in place by financial services providers

Abstract:

In proceedings brought by the Australian Securities and Investments Commission (ASIC), the Federal Court has found SunshineLoans Pty Ltd (Sunshine Loans) liable for charging customers who entered into small amount credit contracts (SACCs) amendment and rescheduling fees that are prohibited under the National Credit Code (Code). A further hearing will be held to determine relief and penalties.

Federal Court orders Macquarie Bank to pay $10M penalty for unauthorised customer account withdrawals (full judgment update)

Court: Federal Court of Australia
Judge(s): Wigney J
Judgment date: 19 April 2024
Catchwords: s 912A of the Corporations Act 2001 (Cth) contraventions — unauthorised customer account withdrawals — lack of adequate systems to prevent or detect fraudulent transactions by third parties — liability — agreed penalty — regulator standing to enforce civil penalty provisions for failure to have appropriate controls in place by financial services providers

Abstract:

In proceeding brought by the Australian Securities and Investments Commission (ASIC), the Federal Court has ordered Macquarie Bank Ltd (Macquarie) to pay a penalty of $10 million for failing to have effective controls preventing unauthorised fee transactions by third parties on customer accounts, in contravention of s 912A(1)(a) and (5A) of the Corporations Act 2001 (Cth).

Federal Court finds DG Institute made false or misleading representations, sole director knowingly concerned in contraventions (Australian Competition and Consumer Commission v Master Wealth Control Pty Ltd)

Date: 10 April 2024
Court: Federal Court of Australia
Judge(s): Jackman J
Judgment date: 9 April 2024
Catchwords: Consumer law – misleading and deceptive conduct – accessorial liability

Abstract:

The Federal Court has found Master Wealth Control Pty Ltd (Master Wealth Control), trading as DG Institute, made false or misleading representations in the promotion and sale of two education programs for control of wealth. Its director, Ms Dominique Grubisa, was also found liable for aiding, abetting and procuring contraventions and being knowingly concerned in and party to the contraventions.

Background

DG Institute offered two education programs relating to property and business investment to consumers called Real Estate Rescue (RER) and Master Wealth Control (MWC) from April 2017 to November 2022. Both programs were promoted through free in-person and online seminars and in videos featuring Ms Grubisa on its website.

During this period, at least 1,900 and 1,800 students were enrolled in the RER and MWC programs respectively and each paid between $4,500 to $9,200 to participate. DG Institute earned a total of over $18 million in revenue from both programs.

Corporate Finance Update – Issue 16

Date: 9 April 2024
Source: Australian Securities & Investments Commission (ASIC) 

Abstract:

The recent Corporate Finance Update Issue 16 delves into a range of topics within the corporate finance sector, focusing on cybersecurity, environmental compliance, greenwashing, and significant regulatory updates.

Cybersecurity Insights: The update emphasises the partnership between the regulatory body and the Council of Financial Regulators (CFR) in conducting Cyber and Operational Resilience Intelligence-led Exercises (CORIE) with major financial organisations. These exercises aim to fortify cyber resilience by simulating realistic cyber attacks to identify and address vulnerabilities, particularly in password management and access controls. Findings reveal critical security gaps, underscoring the need for enhanced cybersecurity measures, including robust password protocols and multifactor authentication, to protect against evolving cyber threats and safeguard sensitive data within the financial services sector.

Environmental Compliance and Greenwashing: The issue sheds light on the enforcement actions taken against greenwashing. ASIC's issuance of infringement notices to entities such as Morningstar and Northern Trust highlights the regulatory focus on ensuring that companies' environmental claims are truthful and substantiated. The update details the specific allegations against these firms, pointing out the discrepancies in their environmental claims and the actual investments or practices they engaged in.

Federal Court finds Vanguard engaged in greenwashing by misrepresenting ESG credentials of investment fund (Australian Securities and Investments Commission v Vanguard Investments Australia Ltd [2024] FCA 308)

Date: 3 April 2024
Court: Federal Court of Australia
Judge(s): O’BRYAN J
Judgment date: 28 MARCH 2024
Catchwords: CONSUMER LAW – ss 12DB and 12DF ASIC Act – greenwashing – ESG representations

Abstract:

In proceedings brought by the Australian Securities and Investments Commission (ASIC), the Federal Court has found Vanguard Investments Australia Ltd (Vanguard) liable for breaching the consumer protection provisions in ss 12DB and 12DF of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) by making false or misleading representations about the ESG screening criteria for its Ethically Conscious Global Aggregate Bond Index Fund (the Fund). A hearing as to penalties will occur at a later date.

The case:

ASIC alleged that in Product Disclosure Statements (PDS), media releases, website content, a Youtube video interview and at a promotional event presentation later published online, Vanguard had made representations that the Fund offered an ethically conscious investment opportunity by seeking to track the Bloomberg Barclays MSCI Global Aggregate SRI Exclusions Float Adjusted Index (Index)) and that before being included in the Index (and thus, the Fund), securities were researched and screened against ESG criteria and those that breached the criteria were excluded or removed.

Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 introduced

Date: 3 April 2024
Source: Parliament of the Commonwealth of Australia

Abstract:

On 27 March 2024, landmark climate reporting legislation was introduced into the House of Representatives as Schedule 4 of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Bill).

The Bill was introduced following consultation on an exposure draft of the Bill and, if enacted, would introduce a new mandatory climate disclosure reporting regime in Australia which is aligned with international standards.

The Senate has referred the provisions of the Bill 2024 to the Senate Economics Legislation Committee for inquiry and report by 30 April 2024.

Mandatory climate-related reporting regime

The specific details of the new mandatory climate disclosure requirements will be set out in new accounting standards which are currently being developed by the Australian Accounting Standards Board (AASB) and based on the International Sustainability Standards Board (ISSB) standards: IFRS S1 and IFRS S2.

There are a few key differences in the Bill compared with the exposure draft. For example, the reporting requirements which apply to Group 1 entities.

New legislation to increase the accessibility and affordability of financial advice

Date: 28 March 2024
Source: Treasury

Summary originally published by Capital Monitor

The Government has introduced the first tranche of legislation to deliver its comprehensive package of reforms to ensure Australians have access to quality and affordable financial advice, said Assistant Treasurer Stephen Jones. There are over five million Australians at or approaching retirement who need assistance to navigate the pension and superannuation systems. Unfortunately, the average cost of financial advice puts professional advice out of reach for many Australians. The Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 implements reforms which reduce unnecessary red tape that adds to the time and cost of preparing financial advice.

ACT: Pre-lodgement check service, new requisition fees and mortgages on Form 026-M accepted until 31 December 2024

Date: 27 March 2024
Source: ACT Land Titles Office

The Australian Capital Territory’s (ACT) Land Titles Office has announced:

  • a new pre-lodgement check service;
  • the introduction of requisition fees; and
  • an extension to the date mortgages on Form 026-M will be accepted.

Pre-lodgement check

Applications can be submitted to the Land Titles Office prior to lodgement for a review which is aimed to:

  • check if the application is correct and ready to lodge;
  • advice what changes (if any) and application may need before lodgement; and
  • avoid extra costs or registration delays.

Fees of $80 for each simple application, $160 for each complex application, and $309 for a unit plan or sublease plan plus $10 per unit over 30 units apply.

A list of simple and complex applications, as well as links to make a pre-lodgement submission, are available on the Land Titles Office’s website.

Requisition fees

For applications lodged from 11 June 2024, requisitions fees may apply if the Land Titles Office has to:

  • follow up on errors in an application; or
  • check an application again.

South Australian Supreme Court rules s 269 of the PPS Act does not operate to set off

Date: 26 March 2024
Court: Supreme Court of South Australia
Judge: Stein J
Catchwords: PPS Act, deemed security interest, vesting in insolvency, remedies, set off

Abstract:

The Supreme Court of South Australia (Stein J) has ruled that it is open to the court to make orders for delivery up of goods vested in a grantor by reason of s 267 of the Personal Property Securities Act 2009 (Cth) (PPS Act) and s 269 of the PPS Act does not operate to set off.

Background

This decision relates to orders to give effect to the judgment in DeBourbel Pty Ltd (in liq)(DeBourbel) v Distilleria Pty Ltd (Distilleria) [2023]SASC 88, BC202306176. That judgment decided that certain assets used by DeBourbel at a whisky distillery were the subject of a PPS lease within the meaning of s 13 of the PPS Act and accordingly a deemed security interest. Because Distilleria had failed to perfect its’ security interest the relevant assets vested in DeBourbel immediately before its liquidation by reason of s 267 of the PPS Act.

ASIC commences first proceedings against director for failing to obtain DIN

Date: 25 March 2024
Source: Australian Securities and Investments Commission

The Australian Securities and Investments Commission (ASIC) has commenced proceedings against a director for failing to obtain a director identification number (DIN).

The DIN regime, administered by the Australian Business Registry Services and enforced by ASIC came into effect on 1 November 2021 and existing company directors had until 30 November 2022 to apply for a DIN.

Failure to have a DIN is both a civil contravention and a criminal offence (s1272C(1) Corporations Act 2001 Cth) This is the first time proceedings have been brought against a director for contravening section 1272C(1). The defendant faces a maximum penalty of $13,320.

Read ASIC’s media release here.

Federal Court dismisses ASIC claim in relation to alleged unfair contract terms in insurance contracts (Australian Securities and Investments Commission v Auto & General Insurance Company Limited)

Date: 25 March 2024
Court: Federal Court of Australia
Judge: Jackman J
Judgment date: 22 March 2024
Catchwords: INSURANCE — Unfair contract terms regime — Where term of product disclosure statement required insured to “tell us if anything changes while you’re insured with us” — Whether term unfair — How lack of transparency should be taken into account under unfair contract terms regime.

Abstract:

The Federal Court (Jackman J) has dismissed the Australian Securities and Investments Commission’s (ASIC’s) claim that certain terms in insurance contracts issued by Auto & General Insurance Company Limited (A&G) were unfair under the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

Background

A&G issued approximately 1.4 million home and contents insurance contracts between April 2021 and May 2023 under numerous brands such as Budget Direct, ING and Virgin Insurance.

Each contract contained terms requiring the insured to notify the insurer of certain events during the insurance period.

Version 7 of ARNECC Client Authorisation Form published

Date: 20 March 2024
Source: Australian Registrars’ National Electronic Conveyancing Council

Abstract:

Version 7 of the Client Authorisation Form has been published by the Australian Registrars’ National Conveyancing Council (ARNECC) and will apply from 28 March 2024.

See our earlier update on 2 February 2024 on version 7 of ARNECC Model Operating Requirements and Model Participation Rules.

A Client Authorisation signed by a client is needed in many conveyancing transactions permitting legal practitioners and conveyancers (subscribers) representing a client to execute documents such as a land registry instrument, electronically lodge documents with the land registry, and authorize or complete any financial aspects of the transaction on the client’s behalf.

A Client Authorisation is required to be in the prescribed form and completed correctly to operate. Subscribers must retain the Client Authorisation together with any supporting evidence for a period of at least 7 years from the date of lodgment of the relevant electronic land registry document.

A Client Authorisation can be located here

For more information about the Client Authorisation see the ARNECC website.

Financial Accountability Regime commences today (15 March 2024)

Date: 15 March 2024
Source: Australian Prudential Regulation Authority (APRA)

Abstract:

The Financial Accountability Regime (FAR) has commenced for the banking industry. As noted in our previous update, on 8 March 2024 the regulators, APRA and ASIC, released final rules and further guidance to support the financial services industry in implementing the FAR regime.

The regulator’s information package released on 8 March 2024 (and updated on 14 March 2024) includes:

Draft Buy Now Pay Later legislation released for consultation

Date: 13 March 2024
Source: Treasury.gov.au

On 12 March 2024 the Australian Government released for consultation the Treasury Laws Amendment Bill 2024 (Cth) (Amending bill). The Amending bill, if passed will regulate Buy Now, Pay Later (BNPL) products within Australia.

The Amending bill amends the National Consumer Protection Act 2009 (Cth), extending its application to BNPL products and bringing them into the existing regulatory framework for other credit products. The proposed legislation will require providers of BNPL products to hold an Australian Credit Licence and take steps to ensure that they are lending responsibly and meeting industry standards concerning product disclosure, dispute resolution and hardship assistance.

The draft bill is accompanied by an explanatory memorandum and draft regulations accompanied by an explanatory statement.

Submissions for interested parties will remain open until 9 April 2024 before the introduction of a final bill to Parliament later this year.

Summary originally published by Capital Monitor.

APRA & ASIC release final rules and further guidance for the Financial Accountability Regime

Date: 11 March 2024
Source: Australian Prudential Regulation Authority (APRA)

APRA and ASIC as joint administrators of the Financial Accountability Regime (FAR) have released final rules and further guidance to support the financial services industry in implementing the FAR.

The materials issued include the Regulator Rules, the Transitional Rules and the Key Functions Descriptions that were released for consultation on 20 July 2023, as well as reporting form instructions to assist banking entities in providing the required information to APRA and ASIC.

APRA and ASIC have also released a joint response to their consultation in July 2023.

For more, see the APRA media release here.

ASIC issues interim stop order to retailer for Centerpay deductions

Date: 4 March 2024
Court: Federal Court of Australia
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

The Australian Securities and Investments Commission (ASIC) has issued an interim stop order under s 739 of the Corporations Act 2001 (Cth) (Corporations Act) to Coral Coast Distributors (Cairns) Pty Ltd (CCD), which operates Urban Rampage retail stores, to halt its practice of having customers enter into credit agreements for purchases through Centrepay deductions.

As these deductions constituted a credit facility, CCD was required to adhere to the design and distribution (DDO) regime, contained in Pt 7.8A of the Corporations Act by publishing a Target Market Determination (TMD) to identify the class of consumers for whom the product was suitable and taking steps to ensure it would be marketed to that class. ASIC considered that CCD's Target Market Determination (TMD) lacked detail, particularly regarding consumers' financial capacity assessment and that this resulted from CCD’s inability to ensure that this form of credit facility was suited to the needs of the consumers identified in the TMD.

E-conveyancing: Adoption of Version 7 of the Model Participation Rules and Model Operating Requirements

Date: 1 March 2024
Source: ARNECC

Following our earlier update on 2 February 2024, all jurisdictions (except the Northern Territory) have adopted Version 7 of the Model Participation Rules (Rules) and Model Operating Requirements (Requirements).

Commencement for each jurisdiction

Version 7 of the Rules and the Requirements commence in:

Changes to the Rules and the Requirements

Our earlier update details the changes between Version 6 and Version 7 of the Rules and the Requirements.

Clean and marked-up versions of the Rules can be found here and the Requirements can be found here.

Adopted Rules and Requirements for each jurisdiction

The Rules for each jurisdiction can be found here.

The Requirements for each jurisdiction can be found here.

Treasury announces review of Australia’s credit reporting framework

Date: 1 March 2024
Source: The Australian Treasury

The Australian Government has announced an independent review of Australia’s Credit Reporting Framework.

The review will evaluate the effectiveness and efficiency of the credit reporting provisions in the Privacy Act 1988 (Cth) and the National Consumer Credit Protection Act 2009 (Cth) in enabling effective lending decisions by credit providers while ensuring the personal information of consumers is adequately protected.

The review is being conducted by former Australian Prudential Regulation Authority (APRA) senior executive Heidi Richards, with a report to be delivered by 1 October 2024.

For more information, see the terms of reference for the review here, and Treasury’s statement here.

SA: Further mandating of e-conveyancing from 8 April 2024

Date: 1 March 2024
Source: Office of the Registrar-General | Land Services SA

In South Australia, from 8 April 2024, there is a widened mandate for dealings which must be lodged via an ELNO.

The Registrar-General has notified lodging parties that the below list of additional dealings which be required to be lodged via an ELNO from 8 April 2024.

  • Application to Register Death (Subsidiary Interest) (AD2)
  • Death of Lessee Determining Lease (ADD)
  • Agreement (AG)
  • Heritage Agreement (AH)
  • Retirement Village (AR)
  • Bankruptcy (BA)
  • Covenant (C)
  • Change of Name (CN)
  • Change of Name (Subsidiary Interest) (CN2)
  • Order of Court (CO2) (note: the mandate only applies to CO2 dealings lodged in relation to section 8 of the Enforcement of Judgments Act 1991 (SA))
  • Cancellation of Retirement Village (CR)
  • Discharge Misc Advance/Charge/Order of Court (DA) (note: the mandate only applies to DA dealings lodged in relation to section 8 of the Enforcement of Judgments Act 1991 (SA))
  • Discharge of Covenant (DC)
  • Discharge of Encumbrance (DE) (note: the existing e-conveyancing mandate is extended to include “by virtue of death of annuitant”)
  • Extension of Lease (EL)
  • Extension of Mortgage (EM)
  • Extension of Underlease (EU)

ANZ/Suncorp acquisition to proceed as Tribunal overturns ACCC decision

Date: 20 February 2024
Source: Australian Competition & Consumer Commission

The Australian Competition Tribunal (Tribunal) has set aside the Australian Competition & Consumer Commission’s (ACCC) decision to deny authorisation of ANZ's proposed acquisition of Suncorp's banking business.

The Tribunal is the review body for decisions made by the ACCC and applies the same authorisation test as the ACCC, granting authorisation if either: 1) the conduct would not have the effect or be likely to have the effect of substantially lessening competition; or (2) the public benefit would outweigh the detriment.

The acquisition will now proceed to Treasurer Jim Chalmers for final approval and also requires modifications to existing legislation through the Queensland parliament

The ACCC’s decision

The ACCC denied authorisation for the acquisition in 2023, stating that it was not satisfied that the proposed acquisition was not likely to substantially lessen competition in the critical banking markets impacted by the acquisition (see our previous Latest Legal Update ACCC denies ANZ acquisition of Suncorp Bank). One of the ACCC’s key arguments was that the deal would make it more likely that the major banks would coordinate in the future.

Federal Court finds crypto fintech engaged in unlicensed financial services (Australian Securities and Investments Commission v Web3 Ventures Pty Ltd)

Date: 16 February 2024
Court: Federal Court of Australia
Judge(s): Jackman J
Judgment date: 9 February 2024

Catchwords: Corporations – operation of unregistered management investment scheme in contravention of s 601ED(5) of the Corporations Act 2001 (Cth) – carrying on financial services business without an Australian Financial Services Licence in contravention of s 911A of the Corporations Act – investment in cryptocurrency

Abstract:

In Australian Securities and Investments Commission (ASIC) v Web3 Ventures Pty Ltd [2024] FCA 64, the Federal Court of Australia held that fintech company Block Earner had engaged in unlicensed financial services conduct in contravention of ss911A(1) and (5B) of the Corporations Act 2001 (Cth) (the Corporations Act) and operated an unregistered managed investment scheme contrary to ss 601ED(5) and (8) of the Corporations Act. The decision clarifies the application of financial services law to crypto products.

Background:

Block Earner operates an online platform through its website, offering various products. Between March to November 2022, Block Earner offered an ‘Earner’ which allowed consumers to earn fixed yield returns from different crypto-assets. From March 2022 onward it Block Earner has offered a second product, ‘Access’ offers consumers streamlined access to peer-to-peer finance.

Mortgage providing indirect benefit to directors held to be unreasonable director-related transaction (Cooper as liquidator of Runtong Investment and Development Pty Ltd (in liq) v CEG Direct Securities Pty Ltd)

Date: 14 February 2024
Court: Federal Court of Australia
Judge(s): O’Sullivan J
Judgment date: 12 January 2024

Catchwords: CORPORATIONS LAW — Where now insolvent plaintiff company executed a mortgage over land in favour of the defendant to secure borrowings from the defendant by two other companies — Where all three companies share two common directors — Where each of the three companies also had other directors — Where the two common directors had given personal guarantees guaranteeing the repayment of borrowings by the other two companies — Whether by the grant of the mortgage the two common directors obtained a benefit by reducing their contingent liability under the terms of the personal guarantees — Whether the transaction was an unreasonable director-related transaction within the meaning of s 588FDA of the Corporations Act 2001 (Cth).

Abstract:

In Cooper as liquidator of Runtong Investment and Development Pty Ltd (in liq) v CEG Direct Securities Pty Ltd, the Federal Court held that a mortgage granted by Runtong Investment and Development Pty Ltd (Runtong) to CEG Direct Securities Pty Ltd (CEG) was an unreasonable director-related transaction under s 588FDA of the Corporations Act 2001 (Cth). Runtong had granted a mortgage to CEG as security for loans to related entities, which indirectly benefited Runtong's directors by reducing their liability under personal guarantees but resulted in no corresponding benefit to Runtong.

Federal Court imposes penalty for improper PPS registrations (Registrar of Personal Property Securities v Brookfield)

Date: 13 February 2024
Court: Federal Court of Australia
Judge(s): Sarah C Derrington J
Judgment date: 30 January 2024

Catchwords: CORPORATIONS – Securities – registration of purported security interest under Personal Property Securities Act 2009 (Cth) – whether applicant applied to register financing statements – whether applicant was a secured party – whether belief on reasonable grounds applicant was or would become secured party in relation to collateral – whether debt under sale and purchase agreement created security interest in favour of applicant – imposition of pecuniary penalty.

Abstract:

In the recent case of Registrar of Personal Property Securities v Brookfield [2024] FCA 29, the Federal Court of Australia addressed the issue of false registrations on the Personal Property Securities Register (PPSR).

Mr Ian Brookfield was found to have contravened ss 151(1) and 151(2) of the Personal Property Securities Act 2009 (Cth) (PPSA) in registering two financing statements without believing on reasonable grounds that he was, or would become, a secured party in relation to the collateral in question, and in failing to apply to amend their effect within five business days after the respective days on which those registrations were made.

Westpac ordered to pay $1.8 million penalty for unconscionable pre-hedging in interest rate swap deal

Date: 12 February 2024
Court: Federal Court of Australia
Judge(s): Lee J
Judgment date: 31 January 2024

Catchwords: Corporations – unconscionable conduct – insider trading – pre-hedging – Corporations – breach of financial services licensee obligations – services not provided efficiently, honestly and fairly

Abstract:

The Federal Court has ordered Westpac Banking Corporation (Westpac) to pay penalties of $1.8 million for unconscionable conduct in an $12 billion interest rate swap deal and $8 million towards for the Australian Securities and Investments Commission’s (ASIC) costs.

Background:

On 20 October 2016, Westpac executed the largest interest rate swap in Australian financial market history (Swap Deal) to allow a consortium of investors from the IFM group and AustralianSuper to acquire a 50.4% interest in Ausgrid. Westpac had previously quoted the consortium an execution margin on the basis that it would not receive notice of the Swap Deal to prevent on-market pre-hedging.

Despite awareness of its clients’ concerns regarding potential pre-hedging, Westpac made internal plans to pre-hedge up to 50% of the interest rate and failed to disclose these plans to the consortium. It actioned the pre-hedging prior to the Swap Deal, making approximately $20.7 million in trading profit.

Financial Accountability Regime commencement update

Date: 7 February 2024
Source: Australian Prudential Regulation Authority (APRA)

Abstract:

In a letter dated 5 February 2024 to all authorised deposit-taking institutions and their non-operating holding companies, APRA and ASIC announced the commencement of the Financial Accountability Regime (FAR) for the banking industry on March 15, 2024. The letter acknowledges the ongoing finalization of Minister Rules and grants the industry additional time to meet new FAR requirements, including registering new accountable persons and complying with notification obligations. Entities are encouraged to submit their applications and notifications as soon as possible, ideally by June 30, 2024. Further guidance on Regulator and Transitional Rules, as well as reporting form instructions, will be provided after the Minister Rules are released.

For more, see the APRA media release here.

Court declares Westpac engaged in unconscionable conduct for interest rate swap, maximum penalty applied

Date: 5 February 2024
Source: Australian Securities and Investments Commission (ASIC)

Abstract:

The Federal Court has declared Westpac Banking Corporation (Westpac) engaged in unconscionable conduct in October 2016 when executing a $12 billion interest rate swap transaction, the largest of its kind in Australian financial market history. Westpac will pay the maximum penalty of $1.8 million in relation to the conduct, together with $8 million for ASIC's litigation and investigation costs. Westpac's unconscionable conduct arose when it engaged in pre-hedging ahead of an interest rate swap transaction with a Consortium comprising AustralianSuper and IFM entities.

Summary originally published by Capital Monitor.

APRA 2024 supervision and policy priorities

Date: 31 January 2024
Source: Australian Prudential Regulation Authority (APRA)

Abstract:

The Australian Prudential Regulation Authority (APRA) has published an interim update on its supervision and policy priorities for the first half of the 2024 year.

Key priorities for the next six months include:

Operational and Cyber Resilience: APRA emphasises the importance of resilience against cyber threats and operational risks, given the increasing reliance on digital technologies. This includes maintaining standards under Prudential Standard CPS 234 (Information Security) and preparing for the upcoming Prudential Standard CPS 230 (Operational Risk Management).

Climate Risk Management: APRA is focused on ensuring entities are prepared to handle financial risks associated with climate change. This includes reviewing Prudential Practice Guide CPG 229 and conducting a Climate Risk Self-Assessment survey.

Financial Accountability Regime (FAR): Set to commence in 2024 for banks and in 2025 for the insurance and superannuation industries, FAR aims to strengthen accountability across regulated entities.

Governance, Culture, Remuneration, and Accountability (GCRA): A broad review of governance requirements is planned, with heightened focus in supervisory engagements.

Recovery and Resolution: APRA emphasises the importance of preparedness for adverse financial scenarios, following the international banking turmoil in early 2023.

Sector-specific priorities include:

Banking Initiatives: These involve managing interest rate risk, regulatory capital adequacy, liquidity, payments system modernisation, and the prudential treatment of crypto-assets.

Insurance Initiatives: APRA will focus on general insurance affordability, life insurance sustainability, and private health insurance capital reforms.

Superannuation Initiatives: This includes enhancing investment governance, improving transparency and accountability, and supporting better retirement incomes.

For more, see the complete Interim Policy and Supervision Priorities update here.

Climate-related financial disclosure - Exposure draft legislation

Date: 22 January 2024
Source: Treasury

Summary originally published by Capital Monitor.

This consultation follows the government's announcement of the final policy design for corporate climate-related financial disclosure requirements, as outlined in the Policy Statement. The Exposure Draft legislation seeks to amend parts of the Australian Securities and Investment Commission Act 2001 and the Corporations Act 2001 (Cth) to introduce mandatory requirements for large businesses and financial institutions to disclose their climate-related risks and opportunities. Treasury is seeking views on the Exposure Draft legislation and accompanying explanatory materials by 9 February 2024. Late submissions cannot be considered.

ALRC recommends confronting complexity in corporations and financial services legislation

Date: 19 January 2024
Source: Australian Law Reform Commission

Summary originally published by Capital Monitor.

The Australian Law Reform Commission (ALRC) Final Report, Confronting Complexity: Reforming Corporations and Financial Services Legislation (Report 141, 2023), was tabled in Parliament by the Attorney-General, the Hon Mark Dreyfus KC MP. The report found that the legislation governing Australia's financial services industry is a tangled mess - difficult to navigate, costly to comply with, and unnecessarily difficult to enforce. Judges have described the current laws as being like 'porridge', 'tortuous', 'treacherous', and 'labyrinthine'.

APLMA jointly publishes guide on introduction to green loan frameworks

Date: 8 January 2024
Source: Asia Pacific Loan Market Association (APLMA)

Abstract:

On 19 December 2023 the APLMA, Loan Market Association (LMA) and Loan Syndications and Trading Association (LTSA) jointly published “An introduction to green loan frameworks” (Guide), a guide providing direction on green loan frameworks as referenced in APLMA’s February 2023 update of the green loan principles.

APLMA states that the guide establishes the structure and purpose of a green loan framework, which is to evidence alignment with the four components of the GLP, as well as the overarching objectives and alignment of projects with taxonomies and eligibility criteria;

The guide also provides a checklist for borrowers aiming to create greater consistency between green loan frameworks and the broader sustainable lending market.

A copy of the Guide is available to APLMA members here.

For further guidance, see our guidance notes on Green finance.

Statutory Declarations Regulations 2023 (Cth) give effect to new Commonwealth statutory declaration regime from 1 January 2024

Date: 4 January 2024
Source: Federal Register of Legislation

Abstract:

Following the passing of the Statutory Declarations Amendment Act 2023 (Cth) (Amendment Act) allowing Commonwealth statutory declarations to be made and witnessed electronically from 1 January 2024 (including through certain online digital verification platforms), the Governor-General has made the Statutory Declarations Regulations 2023 (Cth) (Regulations).

The Regulations repeal and replace the Statutory Declarations Regulations 2018 (Cth) from 1 January 2024 and give effect to the amendments made to the Commonwealth statutory declaration regime by the Amendment Act, including by prescribing:

  • who can witness Commonwealth statutory declarations; and
  • the technical requirements for making Commonwealth statutory declarations under the new digital statutory declaration provisions.

Prescribed witnesses

The Regulations do not change who can witness a Commonwealth statutory declaration.

As with the previous regulations, the Regulations provide that a Commonwealth statutory declaration can be witnessed by any of the following “prescribed persons” in person or by video link:

  • a person enrolled as a legal practitioner on the roll of a state or territory Supreme Court or the High Court of Australia;
  • a person currently licensed or registered to practise law in Australia;

AUSTRAC releases regulatory priorities for 2024

Date: 14 December 2023
Source: Australian Transaction Reports and Analysis Centre (AUSTRAC)

On 14 December 2023 the Australian Transaction Reports and Analysis Centre (AUSTRAC) announced its’ regulatory priorities for 2024. In addition to AUSTRAC’s enduring priorities which include a focus on the high- risk sectors of banking, gambling and remittance AUSTRAC has indicated a key priority will be an increased scrutiny of the following sectors:

  • Non-bank lenders and financiers
  • Digital currency exchanges
  • Payment platforms
  • Bullion

Addressing serious and systemic deficiencies in compliance and risk management is also listed as a key priority and a focus for AUSTRAC’s enforcement work in 2024. AUSTRAC has noted the importance of board and executive accountability for maintaining a culture of compliance and risk management indicating that it may, in appropriate cases, join individuals in proceedings against reporting entities where an individual is in any way concerned in, or a party to a contravention of a civil penalty provision of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth).

Higher fees for foreign investment in housing

Date: 11 December 2023
Source: Treasury

The Treasurer has announced the following proposed changes to the fees payable on foreign investment applications and actions involving land and land entities:

  • tripling the fees payable when a foreign person purchases an established residential dwelling;
  • doubling vacancy fees for all foreign-owned dwellings purchased since 9 May 2017;
  • strengthening the enforcement regime administered by the Australian Taxation Office;
  • applying the commercial foreign investment fees for investment applications and actions for Build to Rent projects from 14 December 2023 onwards.

Legislation will be required to implement the changes and is expected early in 2024.

High Court finds class action waiver clause unfair, allows Ruby Princess appeal

Date: 6 December 2023
Court: High Court
Judge(s): Gageler CJ, Gordon, Edelman, Gleeson, Jagot JJ 
Judgment date: 6 December 2023

Catchwords: CONSUMER PROTECTION - Extraterritorial application of s 23 of Australian Consumer Law - Whether s 5(1)(g) of Competition and Consumer Act 2010 (Cth) extended application of s 23 of ACL to contract- Whether class action waiver clause constituted unfair term under s 23 of ACL and void.

REPRESENTATIVE PROCEEDINGS - Whether class action waiver clause unenforceable as contrary to Pt IVA of Federal Court of Australia Act 1976 (Cth)

PRIVATE INTERNATIONAL LAW – Forum – Exclusive jurisdiction clause – Whether strong reasons not to grant stay of proceedings.

Abstract:

In Karpik v Carnival plc [2023] HCA 39 the High Court determined an interlocutory application arising out of representative proceedings brought on behalf of passengers of the Ruby Princess cruise ship against Carnival plc and Princess Cruise Lines Ltd (Princess) claiming losses caused by illness and deaths caused by the COVID-19 outbreak. The main proceedings were recently determined by the Federal Court in In Karpik v Carnival plc (The Ruby Princess) (Initial Trial) [2023] FCA 1280.

ACCC permits industry collaboration on access to cash

Date: 8 December 2023
Source: Australian Competition & Consumer Commission (ACCC)

The Australian Competition & Consumer Commission (ACCC) has granted interim authorisation to the Australian Banking Association (ABA), its member banks, and relevant industry participants to collaborate in facilitating sustainable access to cash.

The interim authorisation recognises that while cash usage has declined across Australia, it remains an important means of payment for some Australians. The application follows concerns from major supplier of cash-in-transit services, Armaguard, that the industry is at risk and potentially requiring sustainable intervention.

The authorisation relates to discussions and reaching in-principle agreements about an industry response to supporting access to cash. The ABA has advised they will seek separate authorisation before implementing any response arrived at through these discussions.

The ACCC granted the authorisation with reporting and transparency conditions, including the requirement that the ABA must report on their discussions to maintain access to cash in regional and remote areas.

The ACCC’s media release is available here and the interim authorisation can be found here.

Treasury releases proposed mandatory Scams Code Framework for consultation

Date: 4 December 2023
Source: Scams – mandatory industry codes | Treasury.gov.au

On 30 November 2023 the Australian Government released a consultation paper on a proposed Scams Code Framework. The paper is in response to the increasing threat of scams to consumers and businesses coupled with the absence of specific requirements on banks and other industry sectors to address scams.

The Framework proposes an overarching regime containing mandatory obligations for businesses in designated sectors to take action to address scams delivered over their services (possibly contained in the Competition and Consumer Act 2010 (Cth)). Sector specific legislation would then be established enabling regulators to develop sector specific codes.

The banking industry is a designated sector which would be subject to a sector specific code. The sector specific code is proposed to be applicable to all ADI’s, extending the scope of the regime to small and large banks, building societies and credit unions. Possible bank-specific obligations are proposed in the areas of prevention, detection and disruption and those owed to consumers. Some key obligations on banks include:

  • implementing processes to enable confirmation of the identity of a payee to reduce payments to scam accounts;

A new centralised glossary for APRA’s prudential framework

Date: 28 November 2023
Source: Australian Securities and Investments Commission

Abstract:

On 27 November 2023, the Australian Prudential Regulation Authority (APRA) released for consultation a new cross-industry standard, CPS 001 Defined Terms. The purpose of the proposed new prudential standard is to centralise APRA’s existing standards on definitions for authorised deposit-taking institutions and general, life and private health insurers. The proposed new prudential standard does not introduce any new defined terms but simply aims to remove terms that are no longer in use, address duplication and consolidate existing definitions across different standards into one place.

A copy of the letter to industry and proposed new standard are available on the APRA website New cross- industry standard on definitions for ADIs and insurers.

Submissions close on 13 March 2024.

iExtend Enters into Court Enforceable Undertaking with ASIC

Date: 27 November 2023
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

The Australian Securities & Investments Commission (ASIC) has accepted a court enforceable undertaking from iExtend Holdings Company Pty Ltd and iExi Pty Ltd (iExtend), following an investigation into their unlicensed financial services operations. iExtend was found to be offering to pay life insurance premiums for a share in any claims, acquiring interests in policies through co-ownership deeds. The undertaking mandates iExtend to obtain an Australian financial services (AFS) license for issuing financial products and providing related services. ASIC's action ensures that iExtend's practices align with industry standards, safeguarding customer interests.

For more, see the media release here.

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iExtend Enters into Court Enforceable Undertaking with ASIC

Date: 27 November 2023
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

The Australian Securities & Investments Commission (ASIC) has accepted a court enforceable undertaking from iExtend Holdings Company Pty Ltd and iExi Pty Ltd (iExtend), following an investigation into their unlicensed financial services operations. iExtend was found to be offering to pay life insurance premiums for a share in any claims, acquiring interests in policies through co-ownership deeds. The undertaking mandates iExtend to obtain an Australian financial services (AFS) license for issuing financial products and providing related services. ASIC's action ensures that iExtend's practices align with industry standards, safeguarding customer interests.

For more, see the media release here.

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ASIC announces 2024 enforcement priorities

Date: 24 November 2023
Source: Australian Securities and Investments Commission

Summary originally published by Capital Monitor.

ASIC announced its enforcement priorities for 2024, indicating its enforcement focus for the coming year and communicating its intent to industry and stakeholders. In 2024, two new priorities have been added in relation to the superannuation industry, including a focus on member services failures and misconduct relating to the erosion of superannuation balances. New priorities relating to insurance claims handling, compliance with financial hardship obligations and the reportable situation regime have also been added. In addition, ASIC will be taking action against misconduct relating to used car financing to vulnerable consumers and gatekeepers such as auditors, registered liquidators and financial services and credit licensees who do not comply with their legal obligations.

ASIC consults on Banking Code of Practice

Date: 20 November 2023
Source: ASIC consults on ABA’s proposed changes to the banking code

On 17 November 2023 the Australian Securities and Investments Commission (ASIC) released Consultation Paper CP 373 (CP373). The paper invites feedback from interested parties on changes to the Australian Banking Association’s (ABA) Banking Code of Practice (Code). The proposed changes are in response to an independent review of the Code undertaken in 2021.

In particular ASIC is seeking stakeholder’s views on several key issues including:

  • whether the proposed Code imposes obligations on subscribers that are beyond those required by the law and, in doing so, addresses key potential consumer harms;
  • whether the proposed Code provides for effective administrative systems for monitoring compliance and whether the obligations are capable of being enforced;
  • whether any Code review recommendations that the ABA has not supported should be included in the proposed Code; and
  • whether the recommendations accepted by the ABA are appropriately reflected in the proposed Code

Click here to view CP373.

The consultation closes on 15 January 2024 with a decision on whether to approve the revised Code anticipated in the first half of 2024.

Electronic signing, remote witnessing and digital verification of Commonwealth statutory declarations from 1 January 2024

Date: 17 November 2023
Source: Parliament of Australia

The Statutory Declarations Amendment Act 2023 (Cth), allowing Commonwealth statutory declarations to be made and witnessed electronically, has received Royal Assent. The amendments will commence on 1 January 2024.

In addition to allowing for electronic signing and remote witnessing, the amendments introduce a new way of executing Commonwealth statutory declarations through a digital verification process conducted on a prescribed online platform.

Unfair Contract Terms reforms commence

Date: 10 November 2023
Source: Australian Securities and Investments Commission (ASIC)

Summary originally published by Capital Monitor.

From 9 November 2023, reforms will make UCTs illegal, attracting substantial penalties under the Competition and Consumer Act 2010 and the ASIC Act 2001, with each unfair term forming a separate contravention. The reforms also expand the class of small business that can rely on UCT protections. To meet the small business threshold from 9 November 2023, a business must either employ fewer than 100 people or have a turnover of less than $10 million for the previous income year. Under the ASIC Act, the UCT regime will only apply to a small business contract if the upfront price payable (excluding interest) for the contract is $5 million or less.

Statutory Declarations Amendment Bill passes both houses of Parliament

Date: 10 November 2023
Source: Parliament of Australia

The Statutory Declarations Amendment Bill 2023 (Cth), allowing Commonwealth statutory declarations to be made and witnessed electronically, has passed both houses of Parliament. The amendments will commence on the later of 1 January 2024 and the day after Royal Assent.

In addition to allowing for electronic signing and remote witnessing, the amendments introduce a new way of executing Commonwealth statutory declarations through a digital verification process conducted on a prescribed online platform.

Read the full text of the Bill and the explanatory memorandum on the Parliament of Australia website.

Retail clients compensated over $17.4 million following breaches of financial services laws by OTC derivative issuers

Date: 9 November 2023
Source: Australian Competition and Consumer Commission (ACCC)

Abstract:

The Australian Securities and Investments Commission (ASIC) has overseen over $17.4 million in combined compensation payments to more than 2,000 retail clients affected by breaches of financial services laws by eight retail over-the-counter (OTC) derivative issuers.

Since March 2021, approximately $4.3 million in compensation has been paid to over 1,500 retail clients of the following contracts for difference (CFD) issuers: Capital Com Australia Pty Ltd, CMC Markets Asia Pacific Pty Ltd, Eightcap Pty Ltd, IG Australia (IG Markets Limited and IG Australia Pty Ltd), Pepperstone Group Limited, Saxo Capital Markets (Australia) Limited, and StoneX Financial Pty Ltd trading as City Index.

The affected clients suffered losses on more than 150,000 CFD trades across 100 different CFD instruments which exceeded the leverage ratio limits prescribed by the ASIC Corporations (Product Intervention Order – Contracts for Difference) Instrument 2020/986. The CFD issuers self-reported the breaches, identifying the underlying causes to be change management weaknesses and manual errors, and undertook remediation programs. ASIC reviewed the compensation paid by the CFD issuers, prompting four issuers to agree to pay additional compensation of $2.8 million.

Treasury releases Australia’s Sustainable Finance Strategy for consultation

Date: 5 November 2023
Source: The Treasury

Abstract:

On 2 November 2023 the Federal Treasury released Australia’s Sustainable Finance Strategy for consultation. The Sustainable Finance Strategy supports Australia’s transition to net zero and affirms the Government’s commitment to driving sustainable finance and investment in Australia. The Sustainable Finance Strategy includes 12 policy priorities across three key pillars.

Pillar 1: improving transparency on climate and sustainability:

  1. Establishing a framework for sustainability-related financial disclosures.
  2. Developing a sustainable finance taxonomy, providing a common language and classification system for identifying and reporting on sustainable economic activities and investments.
  3. Supporting credible net zero transition planning.
  4. Developing a labelling system for investment products marketed as sustainable.

ASIC publishes insights on mandatory breach reporting regime

Date: 1 November 2023
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

The Australian Securities and Investments Commission (ASIC) has released its second publication in response to information it has received from financial services and credit licensees concerning mandatory breach reporting obligations (reportable situations regime). The publication notes a lack of any material progress in several areas previously highlighted by ASIC, which include:

  • - A low proportion of licensees reporting, suggesting potential non-compliance
  • - Extended durations taken by licensees to identify, investigate, and remedy certain breaches
  • - Ongoing challenges in pinpointing and documenting the underlying causes of breaches

ASIC Chair Joseph Longo stated that the reportable situations regime has been active for over two years and thus licensees should have adjusted their operations to ensure total compliance. He emphasised that ASIC, despite providing guidance, will now adopt a more stringent stance, including enforcement actions if necessary.

Further modernising business communications measures for corporations, competition, consumer, superannuation and insurance sectors

Date: 30 October 2023
Source: Federal Register of Legislation

Abstract:

The Governor-General has issued the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Commencement Proclamation 2023 (Cth) (Proclamation) to prescribe 1 January 2024 as the start date for the modernised publication measures under the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Act 2023 (Cth) (Modernising Business Communications Act).

The Governor-General has also made the Treasury Laws Amendment (Modernising Business Communications) Regulations 2023 (Cth) (Amendment Regulations) to modify corporations, consumer credit, insurance and superannuation regulations in line with the Modernising Business Communications Act.

Proclamation

The Proclamation fixes 1 January 2024 as the start date for the modernisation of certain publication requirements in the Corporations Act 2001 (Cth) (Corporations Act), the Competition and Consumer Act 2010 (Cth) (CCA) and other legislation, as set out in Pt 4, Sch 1 of the Modernising Business Communications Act.

Exposure Draft for Australian Sustainability Reporting Standards: disclosure of climate-related financial information

Date: 26 October 2023
Source: Australian Accounting Standards Board (ASSB)

Abstract:

The AASB has released an Exposure Draft for Australian Sustainability Reporting Standards: Disclosure of Climate-related Financial Information (ED SR1) which outlines the proposed climate-related financial disclosure requirements for Australian companies.

The ED SRI Sustainability Reporting Standards are based on the Global Sustainability Standards: IFRS1 (sustainability-related financial information) and IFRS2 (climate-related disclosures) released by the ISSB on 26th June 2023.

The AASB is inviting stakeholders to provide feedback on the sustainability standards proposed by ED SR1 by submitting a comment letter on the AASB website or completing an online survey. An invitation to a roundtable discussion will also be offered. Submissions from stakeholders will be accepted until 1st March 2024.

See the full release by the AASB here.

Please see our previous LLU on the Global Sustainability Standards released by the ISSB here.

Joint ACCC/OAIC Compliance and Enforcement Policy for the Consumer Data Right

Date: 25 October 2023
Source: Office of the Australian Information Commissioner (OAIC)

Abstract:

The Australian Competition Consumer Commission (ACCC) and the Office of the Australian Information Commissioner (OAIC) have published a joint policy to outline their approach toward compliance and enforcement of the Consumer Data Right (CDR).

The CDR allows consumers to have more control over their personal data held by businesses and how this data is shared. The CDR regulatory framework consists of:

  • Core provisions under the Competition and Consumer Act 2010 (Cth), the Privacy Act 1988 (Cth) and the Australian Information Commissioner Act 2010 (Cth);
  • Rules made under legislation (Rules);
  • the Competition and Consumer Regulations 2010 (Cth); and
  • Consumer Data Standards made under the Rules.

The OAIC and ACCC will encourage and monitor compliance with the CDR through consumer complaints, mandatory reporting from businesses who hold consumer data, and audits, assessments and information requests for further compliance information.

The OAIC and ACCC will separately exercise discretion for enforcement, giving priority to matters causing harm to the greater CDR regime, widespread detriment to CDR consumers or vulnerable consumers and other conduct of significant public interest. Examples of conduct that are enforcement priorities include…

ASIC revises licensee obligations under the reportable situations regime

Date: 24 October 2023
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

The Australian Securities & Investments Commission (ASIC) has made the ASIC Corporations and Credit (Amendment) Instrument 2023/589 (Instrument), which enacts key alterations to the reportable situations regime. Under the prior regime, Australian financial services (AFS) licensees and Australian credit licensees were mandated to notify ASIC regarding certain reportable situations, particularly ‘significant’ infringements of ‘core obligations’ under s 912D of the Corporations Act 2001 (Cth) (Corporations Act) and s 50A of the National Consumer Credit Protection Act 2009 (Cth).

Under the Instrument , certain breaches relating to misleading or deceptive conduct under subsection 1041H(1) of the Corporations Act and subsection 12DA(1) of the Australian Securities and Investments Commission Act 2001, and false or misleading misrepresentations under s12DB(1) of the ASIC Act, are no longer considered significant breaches of core obligations requiring reporting. For a breach to be eligible for these exemptions, it should…

ASIC Annual Report 2022-23

Date: 20 October 2023
Source: Australian Securities and Investments Commission

Abstract:

Summary originally published by Capital Monitor.

ASIC continued its strong focus on enforcement action in the last financial year, driving positive outcomes for consumers and small businesses, and maintaining trust and integrity in Australia's financial system. Releasing ASIC's 2022-23 Annual Report, Chair Joe Longo said ASIC actively litigated and sought significant penalties to address misconduct. 'Our enforcement action resulted in 35 criminal convictions and almost $190 million in civil penalties and fines imposed by the courts. In addition, we commenced more than 130 new investigations in 2022-23.'

Treasury consults on regulation of digital and crypto assets

Date: 17 October 2023
Source: The Treasury

Abstract:

The Federal Government has released a proposal paper that recommends making crypto exchanges and digital asset platforms subject to existing Australian financial services laws and requiring platform operators to obtain an Australian Financial Services Licence. The proposal paper also recommends requiring digital asset platforms adhere to minimum standards for holding tokens, standards for custody software, and standards when transacting in tokens. Feedback on the proposal paper is due by 1 December 2023, with further consultation on draft legislation planned for 2024.

In recent years, consumers have suffered harm and lost assets due to the collapse of crypto platforms. The proposed regulatory framework intends to increase oversight, protect consumers, support innovation, provide certainty in the industry, and ensure consistency with other jurisdictions.

The proposal paper discusses approaches to regulating digital asset intermediaries, licensing digital asset intermediaries, introducing minimum standards for facility contracts, and introducing minimum standards for ‘financialised functions’.

ASIC's Impact in 2022–23

Date: 16 October 2023
Source: Australian Securities & Investments Commission (‘ASIC’)

Abstract:

The Australian Securities & Investments Commission (ASIC) has released its 2022–23 Annual Report, which has reinforced its commitment to robust enforcement actions to benefit consumers and small businesses while upholding trust in the financial system.

ASIC's efforts in the period resulted in 35 criminal convictions, nearly $190 million in civil penalties and fines imposed by the courts and the initiation of over 130 new investigations. ASIC noted that its’ priorities aligned with emerging trends and challenges in the regulatory landscape, including sustainable finance, the aging population, digital technology risks, and product design and distribution obligations.

ASIC also referenced a number of important outcomes including its first enforcement action against alleged greenwashing, preventing predatory behaviour targeting vulnerable consumers, halting the distribution of poorly designed financial products, prosecuting breaches of directors' duties, and enhancing cyber resilience practices among Australian businesses and overseeing consumer remediation programs. Finally, the agency reinforced that it will continue to focus on partnerships with stakeholders to enhance industry conduct and trust while rigorously enforcing the law.

ASIC extends electronic precontractual disclosure legislative instrument

Date: 16 October 2023
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

ASIC has made ASIC Credit (Amendment) Instrument 2023/675, which extends the operation of ASIC Credit (Electronic Precontractual Disclosure) Instrument 2020/835 for a temporary period of 12 months until 1 October 2024, pending law reform. In September 2023, the Parliament passed the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Bill 2023 to move exemptions or modifications of the law currently in ASIC Credit (Electronic Precontractual Disclosure) Instrument 2020/835 directly into the primary Acts and regulations. The necessary accompanying regulations have not yet been made. Instrument 2020/835 allows credit licensees and representatives to give pre-contractual disclosure to consumers in the same electronic manner that applies to other credit disclosure documents.

Summary originally published by Capital Monitor.

Court rules in favour of ASIC in major ANZ continuous disclosure case

Date: 16 October 2023
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

The Federal Court has issued a ruling against the Australia and New Zealand Banking Group Limited (ANZ), asserting that the bank had violated continuous disclosure laws (under s 674(2) of the Corporations Act) during a $2.5 billion institutional share placement in 2015. The breach resulted from ANZ's failure to disclose crucial information concerning the allocation of shares to underwriters. ASIC Deputy Chair Karen Chester highlighted that ANZ had neglected to inform the market that underwriters for the share placement had purchased nearly a third of the shares, amounting to approximately $790 million.

Ms Chester added that proper disclosure is fundamental to ensuring fair and efficient markets and investors must be fully apprised of information likely to significantly impact the price or value of a security. This significant decision reinforces the essential role of continuous disclosure rules in upholding market integrity. It also underscores that a substantial acquisition of shares by underwriters during capital raising can constitute price-sensitive information necessitating public disclosure. ASIC will proceed to submit its recommendations regarding suitable penalties, with the final judgment on…

ASIC Action Against Cigno Australia and BSF Solutions for Alleged Unlicensed Credit Operations

Date: 4 October 2023
Source: Australian Securities & Investments Commission (‘ASIC’)

Abstract:

The Australian Securities and Investments Commission (ASIC) has initiated civil penalty proceedings against Cigno Australia Pty Ltd (Cigno) and BSF Solutions Pty Ltd (BSF), and their respective directors, concerning allegations of unlicensed credit activity.

Between July and December 2022, ASIC claims that the two companies provided short-term credit to over 100,000 consumers through a 'No Upfront Charge Loan Model' without holding valid Australian credit licenses. Under this scheme, consumers were charged excessive fees, sometimes amounting to more than 600% of the total loan value, which is in violation of the National Consumer Credit Protection Act 2009 (Cth). ASIC is concerned that this lending model was intentionally designed to circumvent consumer protection laws, allowing the companies to impose substantial fees on vulnerable and financially distressed consumers.

Moreover, ASIC also alleges that Cigno and BSF charged consumers over $70 million in fees while providing more than $34 million in loans without the requisite licenses. ASIC also believes that both directors participated in these unauthorised credit operations.

ASIC is seeking various legal remedies including declarations, pecuniary penalties, adverse…

ASIC & APRA jointly release information to assist ADIs with their transition the FAR

Date: 4 October 2023
Source: asic.gov.au

The Australian Securities & Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) as joint administrators (collectively the Regulators) of the Financial Accountability Regime (FAR) have published information paper (RG 278). The purpose of the paper is to assist Authorised Deposit-taking Institutions (ADIs) and their licensed non-operating holding companies (NOHCs) transition from the Banking Executive Accountability Regime to the FAR. It outlines the key activities that both large and small ADIs are required to undertake to transition to the FAR (including but not limited to determining their entity profile, allocating additional prescribed responsibilities to existing or new accountable persons and allocating all applicable key functions to relevant accountable persons).

In addition, RG 278 includes:

  • key dates for ADIs and NOHCs in respect to the FAR commencement;
  • an ADI accountability statement guidance and template; and
  • an appendix which details the key differences between the BEAR and the FAR requirements.

ANZ penalised $15M for misleading customers about credit card funds

Date: 26 September 2023
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

The Federal Court has ordered Australia and New Zealand Banking Group Limited (ANZ) to pay a pecuniary penalty of $15M after finding that it misled customers about the available funds in certain credit card accounts. The court declared that ANZ made false or misleading representations in contravention of s 12DB(1)(g) of the Australian Securities and Investments Commission Act 2001 (Cth) and failed to do all things necessary to ensure that the credit activities authorised by its credit licence were engaged in efficiently, honestly and fairly in contravention of s 47(1)(a) of the National Consumer Credit Protection Act 2009 (Cth).

ANZ admitted to making false or misleading representations on its internet banking platform, mobile app and at ATMs. ANZ had falsely indicated that customers could obtain a cash advance from funds stated to be in their ‘Available Funds’ without incurring fees or interest. However, this ‘Available Funds’ amount was higher than the sum actually available for withdrawal because ANZ had not cleared deposits into the credit card accounts.

TNFD releases final recommendations for nature-related disclosures

Date: 25 September 2023
Source: The Taskforce on Nature-related Financial Disclosures (TNFD)

On 18 September 2023 at Climate Week NYC, the TNFD released its final recommendations for nature-related risk management and disclosure (TNFD recommendations). The TNFD recommendations provide a framework for reporting and assessing nature-related risks and opportunities to assist companies and financial institutions to better understand, report and act on their dependencies and impacts on nature, and to align their activities with global goals for biodiversity and climate.

The final recommendations build on the previous draft framework that was published in July 2023, and incorporate feedback received during an extensive market consultation and testing process. Consistent with the approach of the Task Force on Climate-related Financial Disclosures, the TNFD recommendations cover four pillars: governance, strategy, risk & impact management, and metrics & targets, and are designed to enable integrated nature-related and climate-related disclosures. The TNFD also provides additional guidance for financial institutions and specific biomes.

To assist companies and financial institutions in (voluntarily) adopting its recommendations, the TNFD has also published implementation guidance and other supporting materials including guidance on the identification and assessment of nature-related issues, found here.

ASIC urges AFS licensees to strengthen remediation procedures

Date: 26 September 2023
Source: Australian Securities & Investments Commission (ASIC)

Abstract:

Following a review of the remediation policies and procedures of several large financial institutions, the Australian Securities & Investments Commission (ASIC) has called on Australian financial services and credit licensees to ensure that they remediate affected consumers quickly and fairly in accordance with ASIC’s Regulatory Guide 277: Consumer Remediation (RG 277). RG 277, which replaced and expanded upon the scope of Regulatory Guide 256: Client review and remediation conducted by advice licensees, offers guidance for Australian financial services and credit licensees on best practices for consumer remediation programs initiated on or after 27 September 2022.

ASIC’s review identified certain practices that were inconsistent with the obligations under RG 277 for licensees to be proactive, timely and fair in their approach to consumer remediation. Key findings from the review include…

APRA releases new draft of superannuation prudential standard for consultation

Date: 25 September 2023
Source: Australian Prudential Regulation Authority (‘APRA’)

Abstract:

The Australian Prudential Regulation Authority (APRA) has announced plans to modify its core superannuation prudential standard, SPS 515 Strategic Planning and Member Outcomes, with the aim of improving outcomes for members in the superannuation system.

The regulator has released a discussion paper for stakeholder consultation on the proposed revisions, which focus on three main areas:

  1. Ensuring that expenditure requirements are aligned with the best financial interest duty and, for retirees, help uphold the retirement income covenant. Trustees are now required to provide valid reasons for expenses related to business operations;
  2. Raising the standards for how trustees handle financial resources. The draft SPS 515 is intended to guarantee that trustees consistently maintain a prudent approach in matters like establishing fees and managing reserves funded by members.
  3. Enhancing the handling of risks associated with members being moved between different funds.

APRA has also indicated that it would retire its guidance circular on the "sole purpose test," stating that it is outdated and no longer needed.

Licensing and professional registration activities - 2023 update

Date: 25 September 2023
Source: Australian Securities & Investments Commission (‘ASIC’)

Report 772 Licensing and professional registration activities: 2023 update (REP 772) outlines ASIC's licensing and professional registration activities, discusses new and proposed changes to processes, and notes other ASIC work that affects licensees. ASIC's Chief Executive Officer, Warren Day said, 'Our report highlights the important gatekeeping role served by ASIC's Licensing function. It ensures applicants seeking an Australian financial services licence, credit licence or professional registration meet the high standards required to provide these regulated services.' In the same period, 401 licence applications were withdrawn or rejected for lodgement, 515 licences were cancelled and 26 licences were suspended.

ASIC’s proposed new and updated guidance covers:

Summary originally published by Capital Monitor.

Government releases draft reforms to Personal Property Securities Act

Date: 25 September 2023
Source: Treasury.gov.au

On 22 September 2023 the Australian Government (Government) released for consultation exposure drafts of the Personal Property Securities Amendment (Framework Reform) Bill 2023 (Amendment Bill) and new Personal Property Securities Regulations 2023 (new PPS Regulations). The Amendment Bill amends the Personal Property Securities Act 2009 (PPS Act) and adopts the majority of recommendations contained in the statutory review of the PPS Act released by Government in 2015 (Whittaker Review).

The Government has also released a Recommendations Index which sets out the Government’s response (either: accept, accept in part, accept to consider and consult or reject) to each of the 394 recommendations contained in the Whittaker Review. The Government has accepted to consider and consult on 19 recommendations and is seeking further views on 16 of these recommendations before settling on a finalised position. Accordingly, these recommendations are not canvassed by the exposure drafts of the Amendment Bill and proposed new PPS Regulations.

NAB penalised $2.1M for unconscionable conduct in wrongfully overcharging customers

Date: 22 September 2023
Court: Federal Court of Australia
Judge(s): Derrington J
Judgment date: 22 September 2023
Catchwords: Civil penalties – contravention of financial services laws – unconscionable conduct in contravention of Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) s 12CB(1) – whether the regulator has alleged one contravention or multiple.
Pecuniary penalties – appropriate penalty to be imposed pursuant to ASIC Act s 12GBA – whether the unconscionable conduct was “deliberate” – whether the contravenor has previously been found to have engaged in any “similar conduct”.

Abstract:

In Australian Securities and Investments Commission v National Australia Bank Limited (No 2) [2023] FCA 1118, the Federal Court ordered National Australia Bank Limited (NAB) to pay a pecuniary penalty of $2.1 million for engaging in unconscionable conduct contravening s 12CB(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) by charging periodic payment fees despite knowing it had no contractual entitlement to do so.

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