By Sky Kim and Kerensa Sneyd
On 26 October 2018, two amending Acts commenced that will further improve consumer protections and enhance regulator powers.
Unfair contract terms investigation powers for ASIC
New protections for consumers and small businesses against the use of unfair contract terms have been introduced as part of a set of statutory amendments to clarify and strengthen consumer protections more generally. In addition to unfair contract terms, which are the most relevant to the financial services industry, these additional protections relate to consumer guarantees, unsolicited consumer agreements, product safety, false billing, unconscionable conduct, and pricing. The new protections are contained in the Treasury Laws Amendment (Australian Consumer Law Review) Act 2018 (ACL Act) which implements certain recommendations of the Australian Consumer Law Review Final Report by amending the Competition and Consumer Act 2010 (Cth) (CCA) and the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).
The ACL Act has introduced amendments to the ASIC Act that now enable the Australian Securities and Investments Commission (ASIC) to investigate possible unfair contract terms. This is an important change because until now ASIC’s investigative powers were only triggered by contraventions or possible contraventions of the law. This meant that their investigative powers did not allow for investigations of possible unfair contract terms, because the use of unfair contract terms is not prohibited by law (but of course the terms may be void). Similar powers have also been given to the Australian Competition and Consumer Commission to enable investigation of possible unfair contract terms under the CCA.
By Kerensa Sneyd
Professionalism in financial services was the topic addressed last Thursday 11 October by a range of speakers presenting at the 2018 FINSIA Summit. Throughout this year, key regulators have spoken openly about the importance of professionalism in the banking sector and the role it plays in rebuilding community trust. The public hearings of the Royal Commission into Misconduct in Banking, Superannuation and Financial Services has also highlighted the significant work that lies ahead in order to restore trust and confidence in the sector. Continue reading
By Philip Hopley
The Australian regulatory financial services sector has certainly been giving props to Greek philosophy of late with its channelling of Heraclitus’ statement that “there is nothing permanent except change.”
Now that the dedicated insurance hearings at the Royal Commission have finished, here is a snapshot of the current legislative and regulatory plans for the insurance industry that are in train and coming over the horizon.
- Product design and distribution obligations & intervention powers – following the recent consultation by Treasury, draft legislation has now been introduced into parliament (link here).
- Unfair contract terms legislation to apply to insurance – Treasury consultation on a proposed model law ended in August (link here).
- Life insurance claims reporting – ASIC and APRA are in the process of creating a formal reporting regime for life insurance claims to drive accountability in the sector (link here).
- Disclosure regime for general insurance – Treasury is currently reviewing and considering reform of the product disclosure regime for general insurance products (link here).
- ASIC oversight of insurance claims handling – work to implement this recommendation from ASIC Report 498 in 2016 was placed on hold by the Royal Commission. The impetus for change in the law has only increased in the meantime and reform must now be very likely.
- Civil penalties for breach of the duty of utmost good faith – the government has agreed to give ASIC the power to impose civil penalties on insurers that breach their duty of utmost good faith, as recommended in ASIC’s Enforcement Review Taskforce Report in December 2017 (link here).
- ASIC approval of industry codes – another Taskforce Report recommendation by ASIC that the government has agreed to, pending the Royal Commission’s final report, is to move the general and life insurance codes of conduct to a co-regulatory model where ASIC approves these codes and enforces breaches.
No doubt the above proposals will receive a tailwind from the publication of the interim Royal Commission report at the end of September and the final report at the beginning of February 2019, that will consider insurance and superannuation.
The obvious questions at this stage are whether the planned reforms that pre-date the Royal Commission will be seen to go far enough, whether additional reforms are likely to feature to add to the list, whether the government can legislate in time before next year’s federal election and what difference a change in government may bring.
It seems likely it will take at least the next six to 12 months for a more complete picture of the legislative and regulatory reform programme to emerge.
Written by Amy Ciolek and Kiara Salvia
On 12 September 2018, the Australian Competition and Consumer Commission (ACCC) released for public consultation the Consumer Data Right (CDR) Rules Framework (Rules Framework) following the release of the exposure draft Treasury Laws Amendment (Consumer Data Right) Bill 2018 (the Bill) which proposes amendments to the Competition and Consumer Act 2010 (Cth), the Australian Information Commissioner Act 2010 (Cth), and the Privacy Act 1988 (Cth). Continue reading
Written by Lisa Whiting
Consumers are set to receive certain rights in relation to personal data held about them. These rights are provided for under exposure draft legislation released by Treasury. Submissions on the draft are due by 7 September 2018. Continue reading
Written by Nicola Greenberg
Australians are familiar with the concept of “non-banks”, and have even seen an example of a “beta bank” (U-Bank). Other forms of “challenger” banks, such as neobanks and new banks have been absent from the Australian landscape until more recently. Continue reading
By Amy Ciolek and Julia Massarin
With terminology such as mixers, cold storage, tumblers and Onions
(Onion Routers) (TOR), one may be excused for overlooking the
significance of money laundering the digital age.
FATF Report to G20 Finance Ministers and Central Bank Governors
In July 2018, the Financial Action Task Force (FATF) published its report to the G20 Ministers and Central Bank Governors on digital currency, which reports that:
- the link between virtual currencies/crypto-assets and other predicate crimes appears to be growing;
- countries have regulated crypto in various ways, from implementing a blanket ban against dealing, use, issue and settling, to regulating crypto exchanges; and
- FATF will review its 2015 guidance about crypto currency, and will meet again in September 2018 to discuss crypto related money laundering in more detail.
The Court of Appeal has emphatically confirmed that “the function of the trustees is to manage and administer the scheme; not to design it” in a recent judgement handed down in the UK.
Written by Philip Hopley
The federal government has just released for public consultation a second exposure draft of the legislation that will introduce financial product design and distribution obligations into the Corporations Act and give ASIC new enforcement powers, which includes the issuing of stop orders.
Having considered the submissions provided on the first draft of exposure legislation that was published last year, the government’s updated draft legislation contains a number of qualifications, clarifications and enhancements to the proposed product design and distribution regime. This includes extending the transitional period from one to two years.
For those wanting a snapshot of what has changed there is a helpful Information Note. A more detailed comparison between the current and proposed laws can be found at page 7 of the Explanatory Memorandum. More committed readers can access the full updated draft bill here.
This consultation is open for comments until Wednesday, 15 August 2018. Details of how to do so are here.