For the latest FSR news, see our Breaking News page.
Government announces extension of consultation period for simpler regulatory systems proposals
20 December 2006
The Parliamentary Secretary to the Treasurer today announced that the Government would extend the consultation period for the Corporate and Financial Services Regulation Review Proposals Paper (which was released on 16 November) from 22 December 2006 until 19 January 2007. The Government is encouraging consumers and industry to respond to the proposals and acknowledges it has received requests to extend the consultation period. Once the reforms arising from the Corporate and Financial Services Regulation Review Consultation Paper are settled, they will principally be implemented through the proposed Simpler Regulatory System Bill.
For further details about today's announcement, refer to the media release issued by the Parliamentary Secretary to the Treasurer . (For details about the Corporate and Financial Services Regulation Review Proposals Paper, see our breaking news for 16 November 2006.)
ASIC has now extended the class order relief (pursuant to CO 06/1012, Variation of Class Orders [CO 03/1096] and [CO 06/495]):
- available for actuaries from the requirement to hold an Australian financial services (AFS) licence for a further six months, while the Government finalises its position on the regulation of actuaries; and
- applying to the transitional compensation arrangements for AFS licensees, to allow the Government time to finalise its draft regulation specifying compensation requirements.
In both cases, the current relief will now expire on 30 June 2007.
For background information about the earlier relief available for actuaries, refer to our breaking news for 20 June 2006. For more information about the Government's release of a draft regulation to deal with appropriate compensation arrangements in the financial services sector, refer to our breaking news for 2 November 2006.
ASIC grants PDS relief for multiple deemed issuers of exchange traded derivatives
18 December 2006
ASIC has today announced class order relief [CO 06/682] from the product disclosure statement (PDS) provisions of the Corporations Act (the Act) for financial services licensees who are deemed to be issuers of exchange traded derivatives by section 761E(6) of the Act.
The relief applies where exchange traded derivatives are acquired by retail clients through a series of arrangements involving both:
- a financial services licensee (an intermediary licensee) who is not a participant on a relevant financial market and who makes recommendations about the acquisition of a derivative and introduces the client to a financial services licensee (market participant) who is a participant on the relevant financial market; and
- the market participant who acquires the derivative for the client on the relevant financial market.
Currently, the law generally requires both of these licensees to prepare a PDS for the derivative product and the PDSs must contain statements and information about each licensee. ASIC has issued this class order so that consumers receive a single PDS.
The Government has today released a proposals paper, Streamlining Prudential Regulation: Response to 'Rethinking Regulation'. The Government is seeking comments on proposals to streamline further prudential regulation legislation for authorised deposit‑taking institutions, general and life insurers and superannuation entities. In particular, the Government wants feedback on various issues raised by the Regulation Taskforce on Reducing Regulatory Burdens as well as some related issues which have been raised directly with Government. The Government is also seeking comments on its proposed implementation of outstanding HIH Royal Commission recommendations.
The closing date for submissions is 15 February 2007. The Government is aiming to introduce any refinements to prudential regulation as soon as practicable. It is intended that the reforms be implemented through a Financial Sector (Simplified Regulation and Review) Bill and that an exposure draft will be issued with a view to allowing comments.
For further information, including to access a copy of the proposals paper, refer to the Treasury website.
ASIC consults on updating its organisational capacity policy for licensees
23 November 2006
ASIC has today released two consultation papers about the general obligations of Australian financial services (AFS) licensees under section 912A of the Corporations Act:
- Updating PS 164: Meeting the general obligations, which sets out ASIC's general approach to the AFS licensee obligations under section 912A(1) and ASIC's policy on particular section 912A(1) obligations relating to compliance, risk management, representatives and resources; and
- Updating PS 164: Organisational competence, which relates to the organisational competence obligation under section 912A(1)(e) and consolidates related policy on this obligation from Policy Statement 130 Managed investments: Licensing and other ASIC publications.
The consultation papers, which are part of ASIC's Better Regulation initiatives, do not involve a full-scale review of the policy settings of PS 164 but are aimed at refining ASIC's policy on organisational competence.
The main proposals include:
- improving the communication of ASIC's policy in PS 164;
- applying consistent organisational competence requirements to all kinds of licensees and financial services businesses;
- clarifying that the category of people ASIC looks at for organisational competence purposes does not rely on these people being 'responsible officers' as defined under the Act; and
- referring to various international principles and Australian standards.
ASIC invites comments on the proposals in the consultation papers by 28 February 2007 and aims to issue the final policy statements by the end of May 2007.
For further details (and to access copies of the consultation papers and related documents), refer to ASIC's website.
ASIC welcomes regulation review proposals paper
17 November 2006
ASIC has today issued a media release in support of the Federal Government's Corporations and Financial Services Regulation Review Proposals Paper. In its media release, ASIC noted its role in assisting the Government in developing the proposals paper and said it will continue working with the Government and industry to finalise the proposals that have been put forward and, at the same time, to further progress its Better Regulation initiatives.
For more information about the proposals paper, refer to our news item for 16 November 2006.
The Government today released for public comment the Corporate and Financial Services Regulation Review Proposals Paper (Proposals Paper), which is part of the Government's strategy to reduce the regulatory burden in the financial services and corporate sectors.
The Proposals Paper follows on from the consultation paper released by the Government in April 2006 and the Government's announcement in August that the reforms arising from the consultation paper would principally be achieved through the the Simpler Regulatory System Bill (a draft of which is now expected to be released for comment in early 2007, following feedback received by the Government on the Proposals Paper). The Proposals Paper contains 35 proposals aimed at refining and reducing the regulatory burden in the areas of: financial services regulation; company reporting obligations; auditor independence; corporate governance; fundraising; takeovers; and compliance.
Written submissions on the proposals may be lodged with the Treasury until 22 December 2006.
For further information about the Proposals Paper (and to obtain a copy of it), refer to the Treasury website. You may also be interested in our recent article discussing the proposals (see Allens Focus: Financial Services, December 2006). (For more details about the earlier consultation paper and the proposed Simpler Regulatory System Bill, refer to our news items for 7 April 2006 and 14 August 2006.)
ASIC reports on monitoring superannuation fees and costs
16 November 2006
ASIC has today released Monitoring superannuation fees and costs: an ASIC report, its first report monitoring trends in superannuation fees and costs since the choice of fund legislation came into effect on 1 July 2005. The report is based on the in-use notices received by ASIC between October 2005 and June 2006, and the PDSs to which the notices refer.
ASIC noted in its media release that as this is the first report in this area, it contains baseline information only on selected fees and costs included by superannuation trustees in their PDSs. However, information on trends in fees and costs will be provided in future reports. ASIC also noted that the report:
- represents only a time-limited sample of current superannuation PDSs;
- reflects only the fees and costs information set out in those PDSs;
- will not in every case reflect the fees that will be payable in a superannuation transaction, because of fee rebate and other arrangements widely used in the industry;
- does not take account of the fact that fees and charges are likely to change over the life of superannuation products; and
- deals only with fees and costs disclosed in PDSs (ie, it does not deal with any other aspects of superannuation products).
For further details (including to access a copy of the report), refer to ASIC's website.
Government releases a comparative review of Australian auditor
15 November 2006
The Government has today released a comparative review of the Australian auditor independence requirements, which has been prepared by Treasury. The comparative review compares Australian auditor independence requirements with those in Canada, the European Union, the United Kingdom and the United States.
While this review is not directly related to financial services regulation, auditor independence is one of the issues included in the Government's corporate and financial services regulation review, which was first announced by the Government in April this year and on which the Government released follow up details in August 2006 (which identified the issues (including auditor independence) that would be progressed through legislative reform (ie, the Simpler Regulatory System Bill, which is expected to be introduced into Parliament in 2007)).
As a result of this latest review, the Government proposes to conduct a targeted consultative process on auditor independence with key stakeholders, including ASIC, the Financial Reporting Council, the major audit firms, the three main professional accounting bodies and interested stakeholders to identify any additional measures that could be included in the proposed Simpler Regulatory System Bill. Interested parties are invited to submit written comments on the comparative review by 15 December 2006.
For more details (and to access a copy of the document), refer to the Treasury website. (For further background details about the corporate and financial services regulatory review and the proposed Simpler Regulatory System Bill, refer to our news items for 7 April 2006 and 14 August 2006.)
ASIC announces progress with its Better Regulation initiatives
15 November 2006
ASIC has today issued a media release providing an interim update on its Better Regulation initiatives, a project announced in May 2006. ASIC says it is making good progress in delivering on the program and will issue a comprehensive update on its work in January 2007. (For background information on ASIC's Better Regulation Initiatives, refer to our Breaking News for 3 May 2006.)
The Government has today released for comment draft Corporations Amendment Regulations dealing with appropriate compensation arrangements in the financial services sector. The draft regulations follow on from an extensive review conducted by the Government into compensation arrangements for losses by retail clients who make successful claims against financial services licensees in the financial services sector. (The review was initiated in 2002 to promote discussion on what compensation arrangements should be put in place to meet the requirements of section 912B of the Corporations Act. Commencement of section 912B has been deferred until 1 January 2007 (by ASIC class order CO 06/0495) to enable consultation on the details of the required arrangements.)
The Government believes the draft regulations reach a balance between consumer protection and the cost to businesses and is seeking comments by 30 November 2006.
For further details about the review and to access a copy of the draft regulations and supporting materials, refer to the Treasury website. (For background details about this issue and the ASIC class order relief under CO 06/0495, refer to our news item for 23 June 2006.)
ASIC issues FAQ which confirms authorised representatives should refer to
licensees in business documents
26 October 2006
ASIC has today issued QFS 165, - I am an authorised representative (or general insurance distributor), do I have to refer to my AFS licensee in business documents?, which says that authorised representatives (or distributors who operate under class order CO 05/1070) must generally refer to their AFS licensee in business documents that are connected to the provision of a financial service.
For more details (including to read ASIC's explanation of its response to QFS 165 and to access the further ASIC guidance on this and related issues), refer to ASIC's website.
ASIC announces details of its approach to superannuation clearing houses
and other electronic payment facilities
4 October 2006
ASIC has today provided details of its approach to the regulation of providers of superannuation clearing houses and other electronic payment facilities.
ASIC expects in most cases that providers of these facilities will need to comply with the licensing and disclosure provisions of the Corporations Act (on the basis that superannuation clearing houses and electronic payment facilities usually come within the definition of 'financial products' (being facilities through which non-cash payments can be made). However, ASIC says it will continue to consider applications for relief on a case-by-case basis under its general policy on non-cash payment facilities, as set out in ASIC Policy Statement 185 Non-cash payment facilities.
For further details about ASIC's approach and how to apply for relief, refer to ASIC's website.
ASIC issues latest report on Corporations Act relief applications
29 September 2006
ASIC has today released a report, Overview of decisions on relief applications, outlining decisions on recent applications from the corporate finance, financial services and managed investment provisions of the Corporations Act 2001.
The report, which covers applications considered by ASIC between 1 April 2006 and 30 June 2006, provides an overview of the circumstances in which ASIC exercised, or refused to exercise, its discretionary powers to grant relief and also outlines limited instances where ASIC decided to take a no-action position in relation to non-compliance with provisions of the Corporations Act.
For further details, refer to the ASIC website. (For details of previous update reports issued by ASIC, refer to our Breaking News for 25 July 2006, which also contains references to earlier relief application reports issued by ASIC.)
ASIC has today issued an updated version of policy statement PS 51 Applications for Relief, which outlines:
- how ASIC deals with requests to reduce regulatory burdens;
- what information applicants need to provide in order for ASIC to make a decision; and
- what factors ASIC will take into account when making a decision.
ASIC has also said that it will be developing 'templates' to help provide further guidance on how to make an application for relief. (ASIC hopes to develop the templates by the end of this year.)
The release of this revised policy statement is a part of ASIC's Better Regulation Initiatives (formally announced in May this year), which aim to achieve better and more transparent regulation.
For more details (and to access a copy of the updated PS 51), refer to the ASIC website.
The Government today announced its formal (final) response to the Banks Taskforce report Rethinking Regulation: Report of the Taskforce on Reducing Regulatory Burdens on Business, addressing all 178 recommendations of the report's recommendations. (Today's announcement follows on from the Government's interim response to some of the issues raised in the Banks report, which were announced by the Government when it released the Banks report on 7 April 2006.)
The Banks report made recommendations across a wide range of sectors, including in relation to corporate and financial services regulation. The Government's response to these issues is being dealt with as part of the package of corporate law reform proposals announced yesterday (14 August 2006) by the Government.
For further details (including to obtain a copy of the Government's response to the Banks Taskforce report), refer to the Treasury website. (For background information regarding the Government's interim response to the report, refer to our Breaking News for 7 April 2006. Refer also to our Breaking News for 14 August 2006 for details on how the Government is addressing the reform proposals in relation to corporate and financial services regulation.)
The Government today announced details of the next stage in its corporate and financial services regulation review (following on from feedback received in response to the consultation paper it released on 7 April this year, which contained 56 issues dealing with company reporting obligations, corporate governance, further refinements to financial service regulation, and dealing with regulators).
The Government has identified three categories for progressing the reform proposals, which are outlined in the press release issued today by the Parliamentary Secretary to the Treasurer. In broad terms, the Government intends to:
- progress the reforms principally through legislation - after a consultation paper to be issued next month to settle the proposed measures to be contained in the legislation, it will introduce the Simpler Regulatory System Bill into Parliament;
- effect a number of minor and technical changes through regulations, which are to be released shortly for consultation before being implemented; and
- deal with the remaining remaining issues (ie, those which the Government considers require a more focused approach because of the scope and complexity of the policy issues they raise) as separate projects to be progressed in parallel with the work on the proposed Bill. (Importantly, this category includes the role of the 'business judgment' rule and the need to facilitate product rationalisation.)
For further details (including to access the Government's press release and the list categorising how the reform proposals will be handled by the Government), refer to the Treasury website. (For background information on the consultation paper, refer to our Breaking News for 7 April 2006.)
ASIC issues policy on how to deliver product disclosure about
superannuation investment strategies
3 August 2006
ASIC has today issued policy statement PS 184 Superannuation: Delivery of product disclosure strategies, which sets out how superannuation trustees can deliver product disclosure information about investment strategies to superannuation fund members.
The new policy statement, which commences on 1 July 2007, is relevant to trustees that:
- allow members to instruct them to follow a particular investment strategy; and
- offer at least some investment strategies to members which result in the members' money being invested in a specific accessible financial product (eg, a named managed investment scheme).
Under the terms of ASIC's policy, trustees may deliver the required information about investment strategies with specific accessible financial products either by:
- preparing the information themselves in a product disclosure statement (PDS) for a particular accessible financial product (under the law, without relief, the trustee is not permitted to prepare this PDS as it is not the product issuer), or
- giving a member a PDS prepared by the issuer of the particular accessible financial product (as provided for in the law without relief).
In conjunction with issuing the new policy statement, ASIC has also given relief (under class order CO 06/336) to limit the amount of information about particular financial products that must be included in the PDS for the superannuation entity prepared by the trustee. (This relief applies whichever way the trustee chooses to give members a PDS about a particular accessible financial product.) The relief relates to both the section 1012IA disclosure obligation and to the general disclosure obligations in section 1013D and 1013E of the Corporations Act.
(ASIC has previously granted the superannuation industry an extended deadline until 30 June 2007 to comply with their section 1012IA obligation under class order CO 03/1097 Deferral of s1012IA. This deferred commencement will allow trustees to plan to comply with the law as affected by PS 184, which will commence on 1 July 2007.)
For further details about the new policy and applicable class order relief (and to access copies of the relevant documents), refer to ASIC's website. (Refer also to our Breaking News for 23 June 2006 for background details regarding the extension of the interim relief for superannuation investment strategy product disclosure under section 1012IA.)
ASIC grants class order relief to issuers of periodic statements for
legacy superannuation products
28 July 2006
ASIC has today issued a new class order, CO 06/602 Transitional periodic statement relief for legacy superannuation products, granting interim relief (for a further two year period) to trustees of legacy superannuation products from the:
- new additional transaction and management cost disclosures; and
- common fund expense disclosures,
that are required in periodic statements issued after 1 July 2006 (pursuant to the enhanced fee and common fund disclosure requirements).
The class order relief is available where:
- the periodic statement for the superannuation product indicates who a person can contact to obtain details about the transactions and costs;
- the trustee does not accept new applications for membership of the superannuation product (other than in some permitted circumstances relating to splitting of contributions); and
- the superannuation product relies on software or other technology that was substantially developed more than 10 years ago.
In addition, trustees must:
- notify ASIC if they intend relying on the extension of time under the class order;
- certify that:
- the underlying records system to maintain members' records is based on technology that is at least 10 years old; and
- it would impose an unreasonable burden to provide the enhanced fee and common fund disclosures today; and
- take all reasonable steps to ensure they will be able to make the required disclosures from 1 July 2008 (ie, the end of the transition period).
For further information (including background details about the enhanced fee and common fund disclosure requirements and how to notify ASIC of an intention to rely on the class order relief) and to obtain a copy of the class order, refer to the ASIC website.
ASIC has today released a report, Overview of decisions on relief applications, outlining decisions on recent applications from the financial services and managed investment provisions of the Corporations Act 2001. It also includes (for the first time since ASIC starting releasing its reports on relief applications in December 2004) details of applications that relate to relief from the financial reporting, takeovers and fund raising provisions, having regard to the objectives set out in ASIC's Better Regulationn initiatives (released on 3 May 2006).
The report, which covers applications considered by ASIC between 1 January 2006 and 31 March 2006, provides an overview of the circumstances in which ASIC exercised, or refused to exercise, its discretionary powers to grant relief and also outlines limited instances where ASIC decided to take a no-action position in relation to non-compliance with provisions of the Corporations Act.
For further details, refer to the ASIC website. (For details of previous update reports issued by ASIC, refer to our Breaking News for 10 April 2006, which also contains references to earlier relief application reports issued by ASIC.)
ASIC issues new information (QFS 163) which puts focus on superannuation
17 July 2006
ASIC has released QFS 163 I am a superannuation trustee. Do I need to notify members about member transfers without consent? to ensure that superannuation trustees meet their legal obligations to fund members regarding the reporting of material changes and significant events. ASIC has issued the information following its review of disclosure practices after the introduction of choice of superannuation fund legislation in July 2005 and it is aimed at improving the clarity and timeliness of significant event reporting.
QFS 163 outlines ASIC's policy that any decision that fundamentally affects a member's investment, including a decision to transfer a member's benefits without their consent, is a material change or significant event that must be disclosed to that member.
For further details, refer to ASIC's website.
ASIC issues guide on how it operates as part of its 'better regulation'
10 July 2006
ASIC has today launched ASIC: a guide to how we work, setting out what it does, how it approaches its activities, how it is organised, how it consults and how it is accountable. This Guide is the latest of ASIC's Better Regulation initiatives (released on 3 May 2006) and follows on from the release of ASIC's Service Charter (issued on 30 June 2006), which outlined what Australian companies, financial services businesses and professional service providers can expect from ASIC, including how long it will take to process applications or requests.
For further details on these publications, refer to ASIC's website.
ASIC issues updated fees and costs disclosure guide
5 July 2006
ASIC has today issued an updated guide for product issuers to help them comply with the Corporations Amendment Regulations 2005 (No 1) (the Enhanced Fee Disclosure Regulations). You may be interested in our report (May 2005) for some background information on the Enhanced Fee Disclosure Regulations.
First issued in March 2006, the guide, Enhanced fee disclosure regulations: Questions and Answers – an ASIC Guide, responds to some commonly asked questions about compliance with the Enhanced Fee Disclosure Regulations. The updated guide incorporates answers to five new questions (see questions C1 to C5) on periodic statements. The new answers include guidance to issuers of pure defined benefit superannuation funds and also provide guidance on disclosure of GST, stamp duty, and income tax and grouping of transactions.
ASIC has said that it will continue to monitor issues arising from compliance with the Enhanced Fee Disclosure Regulations and will issue further guidance, if needed (which will take the form of further updates to the existing guide).
For further information (including to access a copy of the updated guide), refer to ASIC's website.
ASIC launches service charter
30 June 2006
ASIC has today launched a Service Charter which sets out what Australian companies, financial services businesses and professional service providers can expect from their dealings with ASIC and is part of the Better Regulations initiatives announced by ASIC in May 2006.
The Charter outlines standards and principles aimed at improving ASIC's service to its stakeholders and includes details of how long it will take to process applications and requests submitted to ASIC. ASIC will report on its performance against key efficiency indicators in its annual report.
ASIC has today announced a new class order, CO 06/495 Extension of transitional compensation arrangements, which extends the transitional compensation arrangements under section 912B of the Corporations Act 2001 until 31 December 2006.
The transitional arrangements are being continued for six months to maintain current minimum compensation requirements while the Government considers its position on a final compensation regime. At present, under a combination of regulations and licence conditions, some licensees are subject to transitional compensation arrangements, as follows:
- professional indemnity insurance requirements continue to apply to most responsible entities of managed investment schemes;
- dealers and advisers in investment products remain subject to security deposit requirements;
- insurance brokers remain subject to the professional indemnity insurance requirements that applied under the now repealed Insurance (Agents and Brokers) Act 1984; and
- market operators continue to maintain fidelity fund style compensation arrangements (and ASX continues to operate the National Guarantee Fund).
The new class order will commence after it has been recorded on the Federal Register of Legislative Instruments.
For further information (including more details regarding the background to the current transitional arrangements and to access a copy of the class order), refer to the ASIC website.
ASIC has today announced the issue of class order CO 06/330 Deferral of section 1012IA – Amendment, which extends current interim relief for superannuation trustees that delays the commencement of the product disclosure requirements in section 1012IA of the Corporations Act from 30 June 2006 to 30 June 2007.
ASIC has announced this extension to provide:
- certainty for superannuation trustees about when they need to comply with section 1012IA; and
- enough transition time for superannuation trustees and issuers of underlying investment products to comply with section 1012IA taking into account ASIC's final policy, which is currently being finalised based the policy proposal paper, Superannuation: Delivery of product disclosure and investment choice, released in November 2004 and submissions received by ASIC in response to that proposal paper, and is now expected to be announced in July 2006.
For further information (including to access a copy of the class order and details of the earlier policy proposal paper), refer to ASIC's website and also to our Breaking News for 11 November 2004 and 9 June 2005.
ASIC has today extended interim relief for:
- actuaries (under class order CO 06/469 Further transitional relief for actuaries) from the requirement to hold an Australian financial services licence until 31 December 2006 while the Federal Government continues its consultation with industry on the application of the licensing provisions to ordinary business activities carried out by actuaries; and
- issuers of general insurance products (under class order CO 06/476 Variation of class orders CO 05/681 and CO 05/683) from dollar disclosure requirements until 31 March 2007 while the Government considers the application of these requirements to general insurance product disclosure statements (PDSs). (This extension of relief follows on from the Government's announced review in May 2005 of PDS requirements for basic deposit products and general insurance products as part of the Refinements to Financial Services Regulation Proposals Paper. As a result of this review, the Government excluded basic deposit products from the PDS regime in December 2005, leaving non-basic and general insurance products under the PDS regime. However, the Government applied a modified PDS regime to issuers of general insurance products and is currently reviewing the application of the dollar disclosure regime to general insurance products as part of the Corporate and Financial Services Regulation Review announced in April 2006.)
For further details on new class orders (and for some background details), refer to ASIC's website. (Refer also to our Breaking News for 7 April 2006 in relation to the release of the Corporate and Financial Services Regulation Review consultation paper and to 19 December 2005 for details on the regulations made to give effect to proposals contained in the Refinements to Financial Services Regulation Proposals Paper.)
ASIC helps simplify disclosure for deposit products
20 June 2006
ASIC has today announced new class order relief, class order CO 06/476 Variation of Class Orders [CO 05/681] and [CO 05/683], which simplifies some disclosure requirements for issuers of deposit products.
CO 06/476 grants:
- permanent unconditional relief to issuers of deposit products from the requirement to include termination values in periodic statements;
- permanent conditional relief to issuers of deposit products from the requirement to disclose interest rates in product disclosure statements; and
- extension of transitional relief to issuers of deposit products from the dollar disclosure requirements from 1 July 2006 to 31 March 2007 (for the purpose of enabling an orderly transition to the new regime. Note that ASIC has said that it will confirm shortly any outstanding practical issues regarding the transition with industry stakeholders.)
For further details of the new class order (including to access a copy) and for some background information on the class order relief, refer to ASIC's website.
ASIC consults on time-share schemes
25 May 2006
ASIC has today released a consultation paper, Review of Policy Statement 160: Time-sharing schemes, in which it is seeking industry and consumer feedback on a proposal to refine its current policy (in ASIC policy statement 160) (PS 160) regarding time-share schemes.
The consultation paper contains proposals to update ASIC's time-share policy (which was released in April 2000) to take into account the FSR amendments to the Corporations Act 2001. In particular, the paper proposes that:
- some time-sharing operators with ASIC relief need to be members of an ASIC-approved external dispute resolution scheme;
- all purchasers of time-sharing interests be given 14 calendar days to exercise cooling-off rights; and
- licensing exemptions be granted in relation to the resale of time-sharing interests for some time-sharing schemes with ASIC relief.
ASIC has said it will continue to apply its existing policy in PS 160 pending finalisation of the consultation. (This includes allowing time-sharing operators to rely on membership of the Australian Timeshare and Holiday Ownership Council as a condition of being exempt from the managed investments provisions under various ASIC relief instruments.)
Comments on the proposals in the consultation paper need to be submitted to ASIC by 17 July 2006.
For further information (including to access a copy of the consultation paper), refer to ASIC's website.
ASIC has today released its Better Regulation initiatives (which were foreshadowed in its media release on 7 April 2006 endorsing the release of the Government's interim response to the Regulation Taskforce Report on Reducing the Regulatory Burden on Business). The document identifies priority regulatory enhancements that ASIC intends to deliver over the coming 18 months, particularly:
- improved transparency about how ASIC works, makes decisions and approaches its legislative functions;
- better accessibility for industry and stakeholders, to enable an improved mutual understanding of decisions and policies;
- engaging with business to identify and reduce areas where there is regulatory duplication or overlap;
- more fully understanding the impact on business of its regulatory decisions, by seeking more reliable and relevant information from business on the quantifiable impact of those decisions;
- helping clients deal more efficiently with ASIC by streamlining and, where possible, reducing paperwork through better use of electronic communications; and
- more comprehensive engagement with the financial industry and businesses through more effective consultation and a better understanding of stakeholder views of its decisions.
In conjunction with the release of this document, ASIC has also indicated that it will establish a Business Consultative Panel to help it identify emerging issues.
ASIC says it wants to continue to demonstrate its commitment to better regulation by rapidly delivering several key projects. It also wants to reduce the number and types of documents it publishes into smaller and more readable sets.
For further details (including to obtain a copy of the Better Regulation initiatives) refer to ASIC's website. You may also be interested in our report, Focus: Capital Markets, which discusses in more detail these latest ASIC initiatives and how ASIC proposes to implement them.
ASIC guidance and statistics on breach reporting notification obligations
2 May 2006
ASIC has today released the following in relation to breach reporting notification obligations of Australian financial services licensees:
- an updated version of its guide to reporting breaches, Breach Reporting by AFS Licensees: An ASIC Guide, which includes a new section explaining how ASIC handles breach notifications
- a template form for lodging written breach reports (FS80), which is provided for assistance only (and it is, therefore, not compulsory for licensees to use it)
- some statistics (categorised by industry, type and ASIC's response) on breach reporting notifications received by ASIC, particularly since 1 July.
ASIC has noted the significant increase in breach of licence notifications since July last year, which it believes shows that the industry is taking this obligation seriously. However, it has also specifically mentioned that it will further investigate the life insurance sector as the low number of breach notifications is at odds with the number of complaints received by ASIC and the Financial Industry Complaints Scheme about life insurance. ASIC is also checking the procedures of a number of licensees who have not yet lodged a breach notification.
For further details (including to access copies of the updated guide and the new reporting form), refer to ASIC's website.
ASIC issues guidance on use of administrative powers in enforcing FSR laws
26 April 2006
ASIC has today issued a guide, Licensing: administrative action against financial services providers - an ASIC guide, to help financial services industry participants better understand ASIC's administrative powers in the enforcement of financial services laws. The guide, which supports previous guidance issued by ASIC on breach reporting for Australian financial services licensees, outlines how ASIC will use administrative remedies to enforce compliance with these laws by licensees and their representatives. It also gives some indication of the issues that ASIC takes into account in determining whether administrative action is the most appropriate regulatory response and provides some guidance on the factors ASIC will consider when determining the length of a banning order (including examples of relevant misconduct for illustration purposes).
For further details (including to access a copy of the guide), refer to ASIC's website.
ASIC releases discussion paper on managing conflicts of interest
19 April 2006
ASIC has today released a discussion paper on managing conflicts of interest in the financial services industry. The discussion paper uses hypothetical case studies, many of which are based on real examples that ASIC has encountered, illustrating conflicts of interest across the financial services industry to explain ASIC's views on how those conflicts should be managed. It suggests practical ways of managing different types of conflicts of interest and covers financial advisers (wholesale and retail), licensees, research report providers, product issuers and fund managers.
The aim of the paper is educative and ASIC is proposing that following the consultation period, the case studies will be incorporated in ASIC's current policy statement on managing conflicts of interest (PS 181 Licensing: managing conflicts of interest), which was released in August 2004.
Comments on the discussion paper are due by Friday, 9 June 2006.
For further details (including to access a copy of the discussion paper), refer to ASIC's website.
ASIC has today formally welcomed the release of the Government's interim response to the Regulation Taskforce Report on Reducing the Regulatory Burden on Business and has also acknowledges the release (on 7 April 2006) of the Federal Government's Corporate and Financial Services Regulation Review Consultation Paper.
ASIC notes that the recommendations made in the report provide an opportunity for ASIC, with Government and other regulatory agencies, to identify and take practical steps to remove unnecessary layers of regulation, and help to alleviate the 'red tape' burden on business. ASIC has also said that it will soon be releasing a series of 'better regulation initiatives', explaining what it is doing and what it plans to do to alleviate the regulatory burden on stakeholders and make its regulation more effective and transparent.
For further details on today's announcement, refer to ASIC's website. (For further information about the Government's response to the Regulation Taskforce Report and the Government's Corporate and Financial Services Regulation Review paper, refer to our Breaking News items for 7 April 2006.)
ASIC has today released a report outlining decisions on recent applications for relief by financial service providers from the licensing, conduct, disclosure and managed investments provisions of the Corporations Act 2001. The report, which covers applications considered by ASIC between 1 September 2005 and 31 December 2005, provides an overview of the circumstances in which ASIC exercised, or refused to exercise, its discretionary powers to grant relief and also outlines limited instances where ASIC decided to take a no-action position in relation to non-compliance with provisions of the Corporations Act. (For details of previous update reports issued by ASIC, refer to our Breaking News for 21 December 2005, which also contains references to earlier relief application reports issued by ASIC.)
The Government has today released its interim response to some of the issues raised in the report of the Taskforce on Reducing the Regulatory Burdens on Business.
The report, guided by industry, small business, consumers and government submissions, makes 178 recommendations (including in relation to financial and corporate regulation) on actions to reduce red tape for Australian businesses. As part of its interim response, the Government has announced immediate actions to address (in part or in full) 86 of the Report's recommendations and proposes to release a final comprehensive response addressing all recommendations by the end of July 2006. The Government has also indicated its intention to work with the financial sector regulators, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission, to clarify the Government's expectations in the performance of their functions and identify where they can adopt common approaches to help reduce business compliance costs, as well as being more responsive to their stakeholders.
The Government today released a Consultation Paper, Corporate and Financial Services Regulation Review, which is the next stage in the Government's program to reduce further the regulatory and compliance burden for financial services and associated industries in Australia.
The consultation paper outlines 56 issues on which the Government is seeking feedback. The majority relate to further refinements to FSR. The other broad areas covered are: company reporting obligations; auditor independence; corporate governance; fundraising; takeovers; collective investments; and dealing with regulators.
The Government wants to consult with industry and consumer representatives on the issues raised in the paper, with a view to formulating proposals to address regulatory concerns. Submissions are due by 19 May 2006.
For further information (including details on how to make a submission), refer to the Treasury website.
ASIC provides information on requirements of issuing accountant's
28 March 2006
ASIC has today posted on its website information on some of the requirements relating to the issuing of certificates by qualified accountants under Chapter 6D (for the purposes of the 'sophisticated investor' test) and Chapter 7 (for the purposes of the 'wholesale client' test) of the Corporations Act.
The article, which is current as at March 2006, covers the following areas:
- who is classed as a qualified accountant
- currency of the certificates
- calculating income or assets for the purposes of Chapter 6D, in relation to the offer of debt or equities
- calculating income or assets for the purposes of Chapter 7, in relation to the offer of a financial product (other than insurance, superannuation or a retirement savings account product or service)
- tips for issuers receiving an accountant's certificate
- a sample certificate for accountants and issuers.
ASIC issues fees and costs disclosure guide
16 March 2006
ASIC has today issued updated guidance for product issuers to help them comply with the Corporations Amendment Regulations 2005 (No 1) (the 'enhanced fee disclosure regulations') that were made on 10 March 2005.
This latest guidance expands on earlier guidance issued by ASIC in May, June and September last year. It includes a series of questions and answers on some commonly asked questions about compliance with the regulations, as well as adding to the earlier guidance with answers to five new questions.
ASIC says it will continue to monitor issues arising from compliance with the regulations and will issue further guidance if necessary.
For further details (including to obtain a copy of the guide), refer to ASIC's website. (For further background information about the enhanced fee disclosure regulations, you may be interested in our report on fee disclosure.)
IFSA releases discussion paper on the role of calculators in educating
14 March 2006
The Investment and Financial Services Association (IFSA) today released a discussion paper, The role of calculators in educating investors, following on from the consultation paper issued by ASIC in August 2005, Online Calculators Consultation Paper, in which ASIC called on the Australian financial services industry to consider the development of a best practice guide for the use of assumptions within online calculators
IFSA has developed the discussion paper (which applies to all consumer calculators in any medium) after considering current practice by its members, recommendations from other industry associations and regulators, and the approach taken to the use of calculators in other countries. The paper includes suggestions for investment, superannuation (accumulation and pension phase) and life insurance calculators.
IFSA hopes that its paper will stimulate debate about how assumptions should be applied within all tools offered by entities directly to the public and it is seeking feedback from interested parties by Friday, 28 April. It proposes to use the feedback to help develop industry-wide consensus about what constitutes best practice, and to assist in the production of calculation tools that provide greater clarity and consistency for consumers.
For more information and to access a copy of the discussion paper, refer to IFSA's website. (For further details about ASIC's policies in this area, including to find out about ASIC's policy on the regulation of generic financial calculators, which was released in December 2005, refer to our Breaking News for 23 August 2005 and 20 December 2005).
FPA adopts principles for managing conflicts of interest
2 March 2006
The Financial Planning Association (FPA) has today announced the adoption by all FPA members of Principles for Managing Conflicts of Interest, which will come into effect from 1 July 2006 (although there are different implementation time frames applying to the four Principles to allow members sufficient time to put in place appropriate structures and practices). The Principles are intended to help members fulfil their primary obligation to work in the interest of clients; they form part of a wider body of work by the FPA to improve remuneration practices in financial planning, including the alternative remuneration code implemented in 2004.
ASIC has today issued a media release in support of the Principles issued by the FPA, which it says will address key issues including separate corporate governance arrangements where planners are related to a product issuer and the elimination of remuneration arrangements that create a bias towards one product over another.
ASIC provides financial reporting relief to foreign licensees
17 February 2006
ASIC has today announced the issue of class order CO 06/68, Conditional relief for foreign licensees from financial reporting and record keeping obligations, which relieves foreign licensees (other than foreign authorised deposit-taking institutions, which are already granted relief under existing class order CO 03/823) from the requirements under Division 6 of Part 7.8 of the Corporations Act 2001 to prepare and lodge audited financial statements and to keep the relevant financial records in relation to their financial services businesses. (This relief is available to foreign licensees irrespective of whether the licensee is regulated by the Australian Prudential Regulation Authority.)
For further details (including to access copies of the class orders), refer to ASIC's website.
ASIC reviews regulation of financial markets
9 February 2006
ASIC has today released a consultation paper, Regulation of financial markets: exemptions from Part 7.2 of the Corporations Act, which sets out a proposal to widen the circumstances in which ASIC might recommend to the Minister that he should grant an exemption from the markets licensing provisions in Part 7.2 of the Corporations Act. Comments on ASIC's consultation paper are due by 28 February 2006.
ASIC issues guidance on compliance with FSR refinements
23 January 2006
ASIC has today provided brief guidance to financial services providers about compliance with the FSR refinements regulations (Corporations Amendment Regulations 2005 (No 5)), which came into effect on 20 December 2005.
At this stage, ASIC does not plan to issue formal, detailed, guidance on the new regulations. It will be guided by the explanatory statement to the regulations and the Government's related information package as well as the original refinements proposals paper in administering the regulations and determining whether entities are complying with their obligations, having regard to the spirit and intent of the regulations. ASIC will, however, monitor developments and provide formal guidance at a later stage if it considers that to be necessary. ASIC is also currently reviewing its publications and relief instruments to determine what amendments (if any) need to be made as a result of the new regulations and it will provide more information on this review in coming months.
For further details about how ASIC will administer the regulations, refer to ASIC's website. (For more details about the FSR refinements regulations and to access a copy of them and the accompanying explanatory materials, refer to our Breaking News for 19 December 2005.)
ASIC reissues practice note on fees for relief applications
13 January 2006
ASIC has today released an update of practice note PN 58 How ASIC charges fees for relief applications relating to fees for financial services providers seeking relief on the licensing, conduct, disclosure and managed investments provisions of the Corporations Act 2001. The updated practice note reflects changes to the Corporations Act and Regulations since the original practice note was issued and is intended to show how fees for relief applications are charged and to describe the principles used by ASIC to calculate the fees.
For further information and to obtain a copy of the updated practice note, refer to ASIC's website.
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