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

  • Client Update: Innovative Superannuation Income Streams - at last

    21 March 2017

    Earlier today, Treasury released exposure draft regulations for 'Innovative Superannuation Income Streams'. They set out income stream standards that will be relevant for products such as deferred annuities and group self-annuitised products. The Allens Superannuation team reports.

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  • Unravelled: Clearing the way for social impact investing

    10 March 2017

    The Commonwealth Treasury is seeking feedback on how to kickstart social impact investment in Australia.

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  • Unravelled: Consumer protection in the banking, insurance and financial sector

    10 March 2017

    The Senate Economics References Committee is conducting an inquiry into the regulatory framework for the protection of consumers in the banking, insurance and financial services sector.

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  • Unravelled: English High Court provides important guidance on approach to LIBOR mis-selling claims

    7 February 2017

    The English High Court has handed down its judgment on the first major case following the global regulatory investigations into alleged LIBOR manipulation.

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  • Unravelled: Retail banking remuneration review

    7 February 2017

    The Australian Bankers' Association last year commissioned Stephen Sedgwick to undertake a review of remuneration in retail banking.

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  • Unravelled: Improving external dispute resolution schemes - rather odd recommendations

    7 February 2017

    It is difficult to describe the interim recommendations of the Expert Panel reviewing the 'financial system external dispute resolution and complaints framework' as anything other than odd.

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  • Unravelled: Mandatory margining

    7 February 2017

    Late last year, APRA released the implementation schedule for its long-awaited Prudential Standard CPS 226 Margining and risk mitigation for non-centrally cleared derivatives.

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  • Client Update: ASIC announces fintech licensing exemptions

    19 December 2016

    As part of its implementation of the 'regulatory sandbox' for fintech companies, ASIC is providing relief for certain fintech businesses from the obligation to hold an Australian financial services or Australian credit licence. Relief may be available for up to 12 months and may be useful to businesses in what ASIC refers to as the 'testing' stage of their development. ASIC has also made some changes to the responsible manager requirements for licensees, which may be particularly useful to 'robo advice' providers. Managing Associate Simun Soljo and Associate Jonathan Gardner report.

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  • Client Update: A framework for CIPRs or just more work for super trustees?

    16 December 2016

    Yesterday, Treasury released a paper seeking feedback on a framework for Comprehensive Income Products for Retirement (CIPRs). It will permit trustees to offer members on a 'soft default' basis 'mass-customised, composite retirement income products' and, to encourage trustees to do what some might think they can already do, trustees will have no liability to a member who sues them because the CIPR was not in the best interests of the member. It is all most surprising, and for trustees it is a whole new kettle of fish. CIPRs are meant to be available from 1 July 2018, but there is a long way between the cup and the sip as they say and we suspect much of it won't make it into law. The Allens superannuation team reports.

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  • Client Update: Product design and distribution rules

    13 December 2016

    On 13 December 2016, Treasury released a paper seeking feedback on the proposed financial product design and distribution obligations, and proposed product intervention powers for ASIC. The proposals are intended to 'create new accountability obligations' for product issuers and distributors. On one view, it is a brave new world, on another, it is just more of the same. Which it turns out to be, we think, will depend on what product issuers make of it and what ASIC does with it. Industry has until March 2017 to make submissions on the detail, it is unlikely that more substantial objections to the policies will be successful. The Financial Services Regulation team report.

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  • Unravelled: Budget superannuation changes passed

    9 December 2016

    The Government's main changes to superannuation have been passed by Parliament. We look at what this means for the superannuation industry (and for you).

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  • Unravelled: Seeking judicial advice on whether to seek judicial advice

    9 December 2016

    For more than 150 years trustees have been able to obtain advice from courts on matters affecting the management or administration of trust property and on matters respecting the interpretation of trust deeds. Trustees would usually only seek such advice, however, if they had doubts about a proposed course of action.

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  • Unravelled: Insourcing investment management in super - challenges and opportunities for in-house teams

    9 December 2016

    With the release of an ASFA Best Practice Paper on insourcing investment management, we look at some of the challenges and opportunities for in-house legal teams that come with the seemingly inexorable move in the superannuation industry towards insourcing investment management functions.

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  • Client Update: Updated fee and cost disclosure - transition period extended

    29 November 2016

    ASIC has today announced that superannuation fund trustees and responsible entities will have until 1 October 2017 to comply with the updated fee and cost disclosure rules for PDSs set out in ASIC Regulatory Guide 97 and ASIC Class Order 14/1252 - but only if they comply with certain conditions. Partner Geoff Sanders and Senior Associate Stephanie Malon report.

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  • Client Update: Successor Fund Transfers - all aboard!

    25 November 2016

    APRA yesterday released a draft guide on transferring a member's benefit from one superannuation fund to another without their consent. Because the member is not consenting, the law says that the receiving fund must, when compared with the existing fund, confer 'equivalent rights' in respect of benefits. APRA has interpreted this requirement narrowly. If APRA is correct, the requirement provides little, if any, protection to superannuation fund members. Senior Regulatory Counsel Michael Mathieson and Partner Michelle Levy report.

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  • Client Update: Review into four major banks - money for consultants?

    25 November 2016

    The Parliamentary Economics Committee released its report following its review into Australia's four major banks yesterday. Our Financial Services Regulation team has a look at the recommendations in this update.

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  • Focus: Road map to anti-money laundering and counter-terrorism financing reform

    4 November 2016

    The Federal Attorney-General's Department has released its draft Project Plan for the implementation of the wide-ranging recommendations arising from the recent statutory review of Australia's anti-money laundering and counter-terrorism financing regime. Partner Peter Haig, Associate Andrew Shetliffe and Lawyer Russ Marshall report.

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  • Unravelled: Life insurance, conflicted remuneration and commissions

    3 November 2016

    The Bill to amend the conflicted remuneration provisions in the Corporations Act for life insurance has been introduced into Parliament a second time and draft regulations have been released for comment. However, we struggle to know how to describe them because the changes seem to have conflicting purposes.

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  • Unravelled: Risk culture - 'an evolving area of supervisory practice'

    3 November 2016

    A director of a bank, life company or general insurer who read APRA's recent information paper on risk culture could be excused for indulging in a wry smile. Since mid-2015 he or she has been subject to legislative obligations concerning risk culture. However, the information paper suggests that APRA is still working out what risk culture is and how to assess it.

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  • Unravelled: The ASIC Enforcement Review Taskforce unloaded

    3 November 2016

    The ASIC Enforcement Review Taskforce members and terms of reference have been announced. The terms of reference are very broad and come as no surprise, with an emphasis on evaluating the adequacy of ASIC's enforcement toolkit. We analyse the key themes that are likely to emerge.

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  • Client Update: Financial advice and fees - ASIC reports

    27 October 2016

    ASIC released its report Financial advice: Fees for no service today. It says that there has been a systemic failure by advice licensees within some of the major banks and AMP to provide ongoing advice in return for ongoing fees. The report relates chiefly to arrangements between licensees and clients when the law still permitted product issuers to pay trail commissions. ASIC says that FOFA, specifically the opt-in and annual fee disclosure requirements, will substantially reduce the likelihood of similar systemic failures recurring, but then concludes that the advice industry 'may still have a culture of reliance on ongoing trail revenue (through commissions and fees) for a portion of their income, without necessarily providing advice to customers in return'. It is not clear why ASIC thinks that FOFA won't break that reliance. Partner Michelle Levy, Senior Regulatory Counsel Michael Mathieson and Managing Associate Simun Soljo report.

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  • Client Update: Conflicted remuneration and life insurance

    20 October 2016

    Exposure draft life insurance regulations were released yesterday. They are a marked departure from the existing conflicted remuneration provisions. Now, a benefit can only be conflicted remuneration if it could reasonably be expected to influence financial product advice. These regulations will create a new class of conflicted remuneration for life risk insurance products that does not depend on the benefit being expected to exert the relevant influence. This will apply 'in addition' to the existing definition of conflicted remuneration. Partner Michelle Levy, Senior Regulatory Counsel Michael Mathieson and Managing Associate Simun Soljo look at the draft regulations.

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  • Client Update: Mandatory margining: APRA final rules released

    20 October 2016

    APRA has released its long-awaited Prudential Standard CPS 226 Margining and risk mitigation for non-centrally cleared derivatives. While these rules are based on the Draft released in February of this year, and address some of the concerns raised during the consultation process, there are still a number of questions which remain unanswered. Partner Tom Highnam and Senior Associate Rod Aldus consider the new standard and some of the potential pitfalls for Australian and international derivative counterparties.

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  • Client Update: Life insurance industry gets a remuneration Bill, ASIC report and Code of Practice

    12 October 2016

    This is a significant week for the life insurance industry, with the re-introduction by the Federal Government of a Bill to reform commissions payable on life insurance policies, the release by ASIC of findings of its review of life insurance claims, and the launch yesterday by the Financial Services Council of its Life Insurance Code Of Practice. Partner Michelle Levy, Managing Associate Simun Soljo, and Lawyer Nicholas Borger report.

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  • Unravelled: The Life Insurance Code of Practice - just a code, or something more?

    7 October 2016

    The new Life Insurance Code of Practice has much to recommend it. The paragraphs concerning policy design are a case in point. But is the Code indeed just a code or does it purport to go further?

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  • Unravelled: Default superannuation under the microscope

    7 October 2016

    You may be forgiven for thinking the Productivity Commission is fixated on superannuation at the moment. Its latest review centres on developing alternate models of allocating default members to products.

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  • Unravelled: Are super funds and managed investment schemes the next frontier for shareholders with activist agendas?

    7 October 2016

    A recent Federal Court appellate decision highlights the fundamental tension in the Corporations Act between shareholders' power to propose resolutions at members' meetings and the proposition that a company is to be managed by its Board of directors.

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  • Unravelled: Practical pitfalls and the sacrosanct limitation of liability clause

    7 October 2016

    Commercial trusts could not operate without limitation of liability clauses; however, getting a limitation of liability clause just right is very challenging.

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  • Client Update: Passporting relief threatened in ASIC Class Order repeal

    29 September 2016

    Foreign financial services providers relying on passporting a foreign licence to provide their services in Australia will find their regulatory relief could be expiring in 2 years – and has become subject to a new condition – following ASIC's actions to repeal the ASIC Class Orders which give effect to Australia's passporting relief regime.

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  • Client Update: Designing effective remediation programs

    19 September 2016

    ASIC issued Regulatory Guide 256: Client review and remediation conducted by advice licensees late last week. In short, RG 256 says an Australian financial services licensee's duty to provide financial services 'efficiently, honestly and fairly' means they have to take responsibility for the consequences of things going wrong. When what has gone wrong amounts to a systemic error relating to advice provided to retail clients, taking responsibility means a review and remediation conducted in a 'comprehensive, timely, fair and transparent' manner. Partners Michelle Levy and Malcolm Stephens and Associate Jonathan Gardner report.

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  • Unravelled: Productivity Commission report into superannuation system bodes well for the future

    6 September 2016

    At first glance, the recent Productivity Commission Draft Report on How to Assess the Competitiveness and Efficiency of the Superannuation System (August 2016) could be dismissed as nothing more than a procedural step along the road to the ultimate goal (as recommended by the FSI) of developing an alternative system of allocating default members to superannuation funds. However, to dismiss the Report so easily would belie the wealth of detail contained in it and the quality of research undertaken by the Commission. In particular, much of the value of the Report lies in the numerous observations made on the current state of the industry in its weighty 285 pages.

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  • Unravelled: Financial Services Class Actions

    6 September 2016

    Our class actions team recently published our Class Action Risk 2016 report. The objective of the report is to look behind the headlines and hype that often surrounds class actions to provide a more holistic and objective assessment of class action risk for our clients. This is particularly important in an environment in which the press surrounding class actions has often heralded a developing crisis for Australian business.

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  • Unravelled: Not better late - the Prime Trust appeal judgment

    6 September 2016

    The main Prime Trust appeal judgement is relatively well known, but a trust's responsible entities and their officers should look at what the appeal court had to say on other related matters.

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  • Unravelled: Improving the role of the Appointed Actuary

    6 September 2016

    APRA is seeking to improve the role of the Appointed Actuary in general and life insurance companies and has proposed some reforms in a discussion paper released earlier this year.

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  • Unravelled: Protecting accrued superannuation benefits from adverse changes

    6 September 2016

    For a long time now, superannuation lawyers have tried to work out the meaning of the following words: 'a beneficiary's right or claim to accrued benefits, and the amount of those accrued benefits, must not be altered adversely to the beneficiary by amendment of the governing rules or by any other act carried out, or consented to, by the trustee of the fund'. Two recent court decisions suggest that that endeavour may be unrewarding.

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  • Unravelled: The High Court has its say on penalties

    9 August 2016

    In case you haven't heard, last week the High Court handed down its decision in Paciocco v Australia and New Zealand Banking Group Limited. In what was perhaps the most highly anticipated High Court decision of the year, the majority found that credit card late payment fees charged by ANZ were not penalties. Here we look at what the High Court had to say about the penalties rule and what this means for business and for class actions in the financial services space.

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  • Unravelled: Conflicts of interest and the duty to manage them

    9 August 2016

    The Corporations Act 2001 (Cth) was amended in 2004 to include an additional obligation for Australian financial services licensees to have in place adequate arrangements for the management of conflicts of interest that may arise in relation to the activities undertaken by the licensees in the provision of financial services. Conflicts were an afterthought, coming a couple of years after the Financial Services Reform Act (Cth) in 2001. At the time, it didn't seem to be a particularly onerous obligation, and so it has proved. The regulators and various enquiries and committees have criticised financial services providers for letting conflicts of interest get in the way of their customers' interests, but the Corporations Act obligation to have adequate arrangements for managing conflicts is a poor basis for requiring licensees to put their customers' interests first'

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  • Unravelled: Post-election policy recap

    9 August 2016

    As the dust settles following the recent federal election, it is a good time to reflect on what we can expect from the re-elected Coalition Government for the financial services sector. There are two main groups of policy proposals that are going to need to get through Parliament. The first is the fairly significant superannuation changes announced in the 2016/17 Budget in May. The second is the series of changes the Government announced in its response to the Financial System Inquiry. This brief article provides a refresher on each of them.

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  • Unravelled: Brexit and financial services regulation

    6 July 2016

    The idea that the UK could, on leaving the EU, simply walk away from a significant amount of EU financial services regulation seems fantastical. It is likely that the UK will, instead, have to adopt (on exit) vast amounts of EU financial services regulation. However, the UK will have no say on the future direction of EU financial services regulation - and it will also have to manage the inevitable future divergence between that regulation and its own domestic law.

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  • Unravelled: Welcome changes to the derivative charging rules for superannuation trustees

    6 July 2016

    The Government has recently made changes to superannuation law that helps clear the way for trustees of regulated superannuation funds to charge fund assets in order to enter into a broad range of exchange-traded and Over-The-Counter derivative transactions. The changes are intended to make it easier for super fund trustees to manage risk in the post-GFC environment.

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  • Unravelled: Blockchain and why smart contracts still need smart lawyers

    6 July 2016

    There has been so much talk about blockchain and distributed ledger technology recently, especially in financial services, that you might be forgiven for thinking it might be more hype than substance. But we think it could be very important technology.

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  • Special Report: Understanding the opportunities and navigating the legal frameworks of distributed ledger technology and blockchain

    17 June 2016

    Authored by a multidisciplinary team from Allens, Blockchain Reaction is designed to assist business stakeholders, decision makers and in-house counsel across a variety of sectors to understand the technology and how it is being used, as well as navigate the regulatory and legal opportunities and challenges.

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  • Client Update: ASIC releases consultation paper on regulatory sandbox exemption for startups

    9 June 2016

    ASIC has released a consultation paper on proposals to facilitate innovation in the financial services sector. The proposals include details of the long-awaited 'regulatory sandbox'. It will be of interest to both emerging companies who may rely on the relief, as well as investors in this space. Senior Associate Simun Soljo and Law Graduate Antonia Ross look at what the paper proposes.

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  • Unravelled: A reprieve for ASIC and APRA ... but not for the FCA

    2 June 2016

    ASIC and APRA often cop flak from various quarters (including from us) and so today, for something different, we train our sights on the Financial Conduct Authority in the UK. What the FCA has said about providing personal advice to retail clients is interesting, debatable and likely to induce a strong sense of déjà vu.

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  • Unravelled: The end of the AML/CTF regime as we know it?

    2 June 2016

    The past year or so has been an action-packed one for devotees of anti-money laundering policy and the recent release of the Report on the Statutory Review of the AML/CTF Act 2006 may herald the most significant changes to our regime since it was introduced a decade ago.

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  • Unravelled: Coming this spring: ACCC to monitor large merchants' payment surcharges

    2 June 2016

    The Reserve Bank has now released a Standard which sets out what payment surcharges will be permitted for the purposes of the new Part IVC of the Competition and Consumer Act 2010 (Cth). The aim of the Standard is to improve competition and efficiency by providing to consumers price signals associated with the actual cost of using certain payment methods, with the ACCC given the power to monitor and enforce compliance with new laws.

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  • Unravelled: AMITs are here (at last)

    2 June 2016

    It has taken a while, but out of the dust of an early Federal Budget and double-dissolution election announcement, a new tax attribution regime for 'Attribution Managed Investment Trusts' has emerged relatively intact. While the AMIT regime should generally be welcomed as a positive thing for MITs in terms of certainty and flexibility, it remains to be seen whether it will achieve another of its original aims.

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  • Unravelled: New ASIC funding - looking beyond the headlines

    4 May 2016

    Along with the public release of the ASIC Capability Review Report, the Government announced a suite of reforms giving ASIC additional (but targeted) funding and has also sought to remove some of the shackles on hiring it believes may be hindering ASIC's ability to recruit top talent. At the same time, the Government confirmed that a 'user pays' model will be introduced for ASIC's funding needs from the second half of 2017 onwards.

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  • Unravelled: ASIC getting a bigger toolkit sooner than expected

    4 May 2016

    In its response to the capability review into ASIC, the Federal Government has made a commitment to accelerate the implementation of a product intervention power for ASIC and the product design and distribution obligations for the financial services industry, but it left to one side some other important issues raised by the review. We consider what this might mean for both the regulator and the regulated.

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  • Unravelled: 'Tough cop' ASIC vs a Royal Commission

    4 May 2016

    Has talk of a royal commission turned the ASIC Capability Review into an unlikely catalyst for an enhanced enforcement agenda? With Labor pushing hard for a royal commission into the banking and financial services industry and an election looming, the Government moved swiftly to announce broad reform measures to equip ASIC with stronger powers and funding, as well as a new Commissioner with a financial crime prosecution background, to ensure that, in ASIC, Australia has a 'tough cop on the beat'.

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