Allens

Financial Services Regulation

We regularly publish articles on topical financial services (and related) matters. These publications contain commentary and analysis to help financial services providers and other industry professionals keep up-to-date with and have a better understanding of the complex and challenging issues in Australian financial services regulation.

The full list of our publications appears below. If you would like to be notified when we add new financial services publications to the site, please go to our subscription page to sign up for email alerts.

For more information, see also our Financial Services Regulation pages and, in particular, our Breaking News section which is updated regularly for current developments.

Financial Services Regulation Publications

  • Linklaters Insights: Corporate Agenda

    27 March 2015

    Corporate Agenda will put the spotlight on corporate issues, suggesting pragmatic responses and solutions to them.

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  • Unravelled: Demystifying bank capital

    5 March 2015

    Hands up if you tuned in to the Financial System Inquiry's discussion of bank capital - but felt you didn't really understand the basics well enough to follow it closely? To paraphrase one of our (numerous) recent prime ministers, this article is 'here to help'.

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  • Unravelled: ASIC Register of Financial Advisers: will it raise quality of advice and standards?

    5 March 2015

    The Federal Government has announced that ASIC will establish a public register of financial advisers by 31 March 2015. The register is intended to benefit consumers, who will be able to check that their adviser is appropriately authorised and qualified before receiving personal advice.

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  • Unravelled: Indirect costs - where to from here for superannuation trustees?

    5 March 2015

    As many in the superannuation and managed investments industries are well aware, there has been a number of significant changes to the manner in which 'indirect costs' will need to be calculated and disclosed in PDSs that are on issue after 1 January 2016. While parts of the industry are continuing to discuss with ASIC some of the problems under the revised regime, it is now clear that core aspects of the new rules are here to stay.

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  • Unravelled: MySuper and promoting the financial interests of MySuper beneficiaries

    5 March 2015

    An examination of a trustee's duty to promote the financial interests of its MySuper beneficiaries: is it outcomes-based or process-based?

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  • Focus: Bigger sticks, smaller budget: ASIC's enforcement in 2015

    25 February 2015

    In 2014, the Australian Securities and Investments Commission (ASIC) was chastened by the Senate Economics References Committee, which wants ASIC to be more effective, but encouraged by the Financial System Inquiry, which wants ASIC to take on greater powers. Meanwhile, the Federal Government has reduced ASIC's funding. The release of ASIC's latest six-monthly enforcement report and its updated regulatory guide on enforceable undertakings provides an opportunity for Partners Matthew McLennan and Alex Cuthbertson and Associate Catherine Li to consider how ASIC might reconcile its competing enforcement priorities in 2015.

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  • Unravelled: ASIC's enforcement powers may receive a boost

    5 February 2015

    In preparing its Final Report, the FSI has clearly paid close attention to the report of the Senate Economics References Committee's Report into ASIC's performance and its recommendations designed to strengthen ASIC through a combination of better funding, an enhanced regulatory toolkit and higher penalties, with a view to enabling it to be the 'respected and feared' leader desired by the Senate Committee. The impact of the FSI's recommendations is now likely to be the subject of further submissions to the Government before any decisions are taken.

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  • Unravelled: The best interests duties - process or outcome?

    5 February 2015

    Superannuation fund trustees and their lawyers (including this one) have been grappling for years with what the covenant in section 52(2)(c) of the Superannuation Industry (Supervision) Act 1993 means. What must a trustee do to exercise its powers and discharge its duties in the best interests of beneficiaries? And despite some very clear statements by many judges including in the High Court that the covenant is concerned with ensuring the trustee is free to exercise its powers and discharge its duties for their proper purpose (without any unauthorised conflict or profit) - the idea that the duty in fact requires trustees of superannuation funds to achieve good outcomes for beneficiaries persists.

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  • Unravelled: What do smoked fish have to do with retirement incomes?

    5 February 2015

    The final report of the Financial System Inquiry recommended that APRA-regulated superannuation trustees be required to offer a 'comprehensive income product for retirement'. This rather modest recommendation in the final report stands in stark contrast to the retirement phase policy options canvassed in the interim report. Some of those policy options were quite radical. My view at the time was that the Inquiry had not done the work needed to support such bold options. Similarly, APRA sounded some notes of caution in its second-round submission to the Inquiry. In this context, it is just as important to identify what the Inquiry has dismissed as it is to discuss what the Inquiry has recommended.

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  • Unravelled: Will Australia serve up a Chilean-style super system?

    5 February 2015

    The Financial System Inquiry's final report was blunt in its assessment of the current state of Australia's super system, noting that the 'superannuation system is not operationally efficient due to a lack of strong price-based competition.' The Inquiry's concern with super fees and costs led to one of the most radical recommendations in its final report - that Australia should consider adopting a system which could perhaps have a distinctly Chilean flavour.

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  • Unravelled: A new dawn for crowd sourced equity funding?

    5 February 2015

    CAMAC and the FSI have acknowledged that the current Australian regulatory settings are hostile to crowd sourced equity funding. A recently released Treasury Discussion Paper has considered three options for law reform and what each might mean for the development of this innovative form of capital raising.

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  • Unravelled: Will Australia serve up a Chilean-style super system?

    5 February 2015

    The Financial System Inquiry's final report was blunt in its assessment of the current state of Australia's super system, noting that the 'superannuation system is not operationally efficient due to a lack of strong price-based competition.' The Inquiry's concern with super fees and costs led to one of the most radical recommendations in its final report - that Australia should consider adopting a system which could perhaps have a distinctly Chilean flavour.

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  • Audio: FSI makes numerous tax observations

    9 December 2014

    Taxation is at the forefront of the reform agenda, with proposed changes being discussed in the Financial Services Inquiry final report and a Tax White Paper expected before the end of the year. Partner and Head of the firm's Tax practice Charles Armitage speaks to BRR Media about what we saw in the FSI final report and what we could be seeing in the White Paper.

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  • Unravelled: Bold and sometimes radical - the final Murray report

    7 December 2014

    The Financial System Inquiry's final report has been released. We haven't tested this with 'Word Cloud', but we think the report can best be encapsulated in the word 'however'. The financial system has held up well, 'however, ....'. And what follows the 'however' is often bold and sometimes radical. There are five chapters and just 44 recommendations - compare this with the Cooper Review's 177 recommendations. But this helps - the messages are clear and the recommendations plain, although much of the implementation is left to the imagination.

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  • Client Update: Peer-to-peer lending - a disruptive threat to banks?

    5 December 2014

    One of the things we are very interested in at the moment is how peer-to-peer lending will develop in Australia, and how it could be a disruptive threat to banks. We're not the only people who are interested though. On 4 December, it was announced that a powerful consortium comprising James Packer, News Corporation and Kerry Stokes had struck a deal to take a 25 per cent stake in SocietyOne. SocietyOne was launched in 2012 as Australia's first peer-to-peer lending platform and also counts Westpac as one of its early stage investors. Partner Gavin Smith, Senior Associates Matt Vitins and Andrew Edington and Lawyer Michael Beaconsfield report on peer-to-peer lending, and how it is regulated in Australia.

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  • Audio: FSI Final Report due out Sunday

    4 December 2014

    The Final Report of the Financial System Inquiry is scheduled to be released this weekend. Partners Michelle Levy and Matthew McLennan spoke to BRR Media about some of the recommendations that may be in the Final Report.

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  • Unravelled: Bank technology failures: A new frontier for regulatory intervention?

    3 December 2014

    The UK's regulatory authorities have imposed the largest ever fines in Europe for technology failures in the financial services industry following a serious IT incident affecting more than 6.5 million customers in the UK. It should serve as a cautionary tale for Australian financial institutions.

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  • Unravelled: Opportunities for financial services from the China-Australia FTA

    3 December 2014

    The Australian and Chinese governments recently announced the conclusion of negotiations on the China Australia Free Trade Agreement. According to DFAT, China's financial services commitments under the agreement represent one of the most substantial market access undertakings China has agreed to with any FTA partner. Australian financial services providers should consider the opportunities that the deal presents.

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  • Unravelled: Taxation of certain unit trusts - 'attribution' model to replace 'present entitlement'

    3 December 2014

    You may be forgiven for having lost track of the proposed reforms to the taxation of managed investment trusts (or MITs) given that this initiative has been 'announced' by successive Federal governments since 2010. Finally though, an exposure draft of new legislation is expected to be released before Christmas that will include a 'third' regime that is intended to provide greater certainty as to the tax transparency (or flow through treatment) of qualifying MITs.

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  • Unravelled: Fighting to protect Fintech innovations

    3 December 2014

    The growth of financial services technology, or Fintech as it is now called, has exploded in recent years, yet many of its creators don't realise that their innovations are patentable.

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  • Unravelled: The disallowance of the FoFA Streamlining Regulation - what has been missed in all the noise?

    3 December 2014

    The Senate's disallowance of the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014 was messy. However, the same could be said of the process by which FoFA was originally enacted.

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  • Client Update: Senate may disallow FoFA regulations

    19 November 2014

    Senators Jacqui Lambie and Ricky Muir this morning joined a group of cross-bench Senators in announcing that they would vote with Labor and the Greens to disallow the Government's FoFA regulations made in June this year - the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014. Partner Michelle Levy, Senior Regulatory Counsel Michael Mathieson and Senior Associate Simun Soljo report on the implications.

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  • Client Update: ASIC seeking feedback on electronic disclosure proposals

    17 November 2014

    The Australian Securities and Investments Commission is seeking feedback on proposals to help facilitate the increased use of electronic means of providing disclosure for financial products and services. The proposals include new class order relief to facilitate the increased use of multimedia product disclosure statements, and revised guidance in Regulatory Guide 221. Partner Marc Kemp and Associate Simun Soljo report.

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  • Client Update: What the regulators said at the ASFA Conference

    13 November 2014

    Earlier today representatives of ASIC and APRA provided some insights into their thinking at a session called 'Up close and personal with the regulators' at the annual conference of the Australian Superannuation Funds Association in Melbourne. Senior Regulatory Counsel Michael Mathieson reports.

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  • Unravelled: Risk management - what, if anything, does the 'three lines of defence' model do?

    5 November 2014

    From 1 January 2015, a new 'common' risk management prudential standard will apply to banks, general insurers and life companies and, in many cases, to other companies in the corporate groups in which those institutions sit. Michael Mathieson looks at the 'three lines of defence' model that APRA proposes to adopt in its associated risk management guidance materials.

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  • Unravelled: The fiduciary duty of mortgage brokers?

    5 November 2014

    There is lots of noise about the duties of financial advisers, and lawyers (including us) love to debate whether FoFA has left any room for fiduciary obligations.

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  • Unravelled: Should APRA's prudential standard-making powers extend to directors' duties?

    5 November 2014

    In recent times, APRA has been active in prescribing duties for directors of the institutions it regulates. In light of what has happened, it is worth asking: should the question of directors' duties be excluded from APRA's prudential standard-making powers?

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  • Unravelled: Big Data v 'personal advice' - an unequal contest?

    5 November 2014

    There is a contest underway between two heavyweights. In one corner of the ring we have Big Data. In the other corner we have the definition of 'personal advice' in section 766B(3) of the Corporations Act.

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  • Unravelled: The 'Internet of Things' meets financial advice

    5 November 2014

    With financial services providers already taking advantage of the possibilities created by a new tide of internet meta data, we need regulators and a regulatory regime that see the opportunities implicit in the change, and not only the risks.

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  • Client Update: Clues for industry in ASIC'S Strategic Outlook

    24 October 2014

    ASIC's recently published Strategic Outlook outlines its priorities for responding to the key risks it believes will affect investors, and gives some interesting clues into what industry participants can expect from ASIC over the next 12 months, such as more surveillance of insider trading, breaches of continuous disclosure obligations and governance practices. It also provides a warning to the six largest financial institutions that it will be targeting them by focusing on their compliance with high-risk areas of the law. Partners Marc Kemp and Michelle Levy and Overseas Practitioner James Kanabar report.

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  • Client Update: Retail life insurance advice - ASIC's views on FoFA revealed

    10 October 2014

    The Australian Securities and Investments Commission released its report reviewing retail life insurance advice yesterday. The report provides insights into ASIC's views on the Future of Financial Advice (FoFA). Partner Michelle Levy and Senior Regulatory Counsel Michael Mathieson report.

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  • Client Update: Proposed disallowance of FoFA 'streamlining' regulation fails

    2 October 2014

    A motion to disallow the vast majority of the provisions of the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014 has failed. Associate Rosie Thomas and Senior Regulatory Counsel Michael Mathieson report.

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  • Unravelled: Is the pain worth the gain?

    1 October 2014

    ASIC has undertaken a bit of a survey of licensees who provide financial product advice to retail clients to see how they are faring a year into FoFA.

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  • Unravelled: Murray in a muddle over retirement incomes

    1 October 2014

    A close reading of the retirement incomes chapter in the interim report of the Financial System Inquiry reveals a series of paradoxes.

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  • Unravelled: Some facts (and myths) about ASIC and product intervention powers

    1 October 2014

    The closer you look at the recent discussion about product intervention powers for ASIC, the clearer it becomes that the discussion has little basis in fact.

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  • Unravelled: What do ASIC and APRA want from Murray?

    1 October 2014

    Although more than 6500 second round submissions have been made to the Financial System Inquiry, submissions made by ASIC and APRA will be read with greater interest than most. The recommendations in these submissions are likely to be given greater weight by the FSI panel members, and could find their way into the final recommendations and ultimately as changes in regulation.

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  • Client Update: ASIC proposes changes to fees and costs disclosure

    24 September 2014

    ASIC has released for industry comment a draft Class Order which would amend the fees and costs disclosure requirements that apply to superannuation and managed investment products. The key proposed amendments relate to the way in which indirect costs must be disclosed. Senior Associate Simun Soljo and Senior Regulatory Counsel Michael Mathieson report.

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  • Unravelled: What do the product intervention powers of the UK financial conduct regulator look like?

    2 September 2014

    If you have been following the Financial System Inquiry, you will not have missed the idea of giving the Australian Securities and Investments Commission (ASIC) additional 'product intervention' powers. These powers exist in the UK. What do they look like? This question is more relevant than ever right now, as the Financial Conduct Authority (the FCA) is about to use its temporary product intervention power for the first time.

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  • Unravelled: ASIC's enforcement decisions - is litigation the most effective deterrent?

    2 September 2014

    We have previously reported on ASIC's submission to the Financial System Inquiry (FSI), and in particular, its assertion that it needs a broader range of more onerous financial penalties in order to punish and deter corporate wrongdoing. ASIC made similar submissions to the recent inquiry by the Senate Economics References Committee into its performance. The Senate Committee's Report, released on 26 June 2014, does recommend that the penalties currently available to ASIC should be reviewed. However, the report is also highly critical of ASIC's enforcement record, and particularly its reliance on enforceable undertakings. This criticism appears to be founded, at least in part, on the Committee's view that litigation, not out-of-court settlement, is a more effective means of deterrence.

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  • Directors' duties and the interests of 'APRA beneficiaries'

    2 September 2014

    The interim report of the Financial System Inquiry (FSI) asks whether directors in different parts of the financial system should have different duties.

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  • Unravelled: Allens' second-round submission to the FSI: the nature and quality of financial services regulation

    2 September 2014

    On 26 August, we lodged our submission in response to the Financial System Inquiry's (FSI) Interim Report.

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  • Unravelled: Could superannuation cease to be prudentially regulated?

    2 September 2014

    The Financial System Inquiry (FSI) has asked whether superannuation should cease to be prudentially regulated. Is this idea likely to go anywhere? Don't be so sure that it won't.

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  • Allens insights: Brave new world where financial advisers work in sales

    20 August 2014

    The Senate Economics Committee's Report into ASIC's performance is an interesting read. It opens by calling ASIC a 'timid, hesitant regulator, too ready and willing to accept uncritically the assurances of a large institution.' And continues in a similar vein for almost 500 pages. ASIC says it does the best it can in the circumstances.

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  • Client Update: Another step towards prudentially regulating conglomerate groups

    18 August 2014

    The Australian Prudential Regulation Authority has taken another step towards implementing its prudential framework for the supervision of conglomerate groups. While it has made some new prudential standards that are specific to conglomerate groups and extended some of its existing standards to such groups, it has delayed the commencement of these changes pending the final report of the Financial System Inquiry and the Government's response to it. The Allens Financial Services Regulation team reports.

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  • Unravelled: Short on solutions for a growing problem

    8 August 2014

    The Financial System Inquiry's interim report devotes a lot of space to superannuation, but doesn't have a great deal to say. What is missing from the report is any vision for a retirement income system and it is hard to see how the FSI will bring about any significant changes. It is also hard to see that any changes will not add to the instability and lack of trust that the report has identified as a real problem for superannuation.

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  • Unravelled: Can product suitability rules succeed where disclosure has failed?

    8 August 2014

    One of the more interesting possibilities raised in the Interim Report of David Murray's Financial System Inquiry is the introduction of product suitability requirements as a complement to the current disclosure regime. The Interim Report presents a case for change but does not set out in detail what change might look like.

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  • Unravelled: Retirement phase of superannuation

    8 August 2014

    The Financial System Inquiry's interim report has identified the retirement phase of superannuation as a priority issue that requires change. If the Federal Government decides to implement various policy options to encourage the development of more suitable products, it could result in significant changes to the retirement phase of superannuation.

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  • Unravelled: Bringing light to the shadows: regulation of the Australian shadow banking sector

    8 August 2014

    The Financial Stability Board has been working since the GFC to develop a policy framework that mitigates the systemic risks of the shadow banking sector, while simultaneously preserving its benefits. We examine international developments in shadow banking and the Board's proposed regulatory response as well as the state of the Australian shadow banking market and the Reserve Bank of Australia and the Australian Prudential Regulatory Authority's policy proposals.

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  • Client Update: Running out of time for retirement income reform

    22 July 2014

    The Government has released a consultation paper on the regulation of retirement income streams. It says that the Government wants to encourage the development of more retirement products. But this is old news and the paper offers few concrete policy proposals, other than in the area of deferred lifetime annuities where the issues have already been identified and only require Government resolve to address. Any change to the regulatory regime is likely to be some way off given the Financial System Inquiry is considering retirement income policies. Any further delay will be disappointing, given the regulatory impediments have been discussed before. Partner Michelle Levy and Senior Associate Simun Soljo report.

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  • Unravelled: The interim report of the Financial System Inquiry

    15 July 2014

    The Financial System Inquiry Interim Report was issued today. There are few surprises in the options and comments, although there are some significant omissions. There does not appear to be any push for a significant shift in policy or in the regulation of the financial system. There will be adjustments and some specific areas targeted for change. But the four pillars policy looks like it is here to stay.

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