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: 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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  • Unravelled: Increasing ASIC's enforcement powers

    8 July 2014

    In its submission to the Financial System Inquiry, the Australian Securities and Investment Commission has again raised the issue of the penalties that are available to it to punish and deter corporate wrongdoing. ASIC's submission recommends that a 'holistic review' be conducted into the availability and adequacy of penalties available under ASIC-administered legislation.

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  • Unravelled: The Financial System Inquiry - matchmaking superannuation and infrastructure investment?

    8 July 2014

    The vast pool of capital held in Australian superannuation funds (now approximately A$1.8 trillion) has long been touted as a natural solution to Australia's infrastructure funding deficit. With the stable long-term cash flows characteristic of infrastructure assets providing a natural fit to the liability profile of the typical superannuation fund, the two seem a perfect match. However, in the words of Shakespeare, 'the course of true love never did run smooth'.

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  • Unravelled: Development of the corporate bond market

    8 July 2014

    It has been recognised for some time that the domestic corporate bond market constitutes a weak spot in the otherwise robust and deep Australian capital markets. The less developed domestic bond market is a distinguishing feature among the leading financial systems and capital markets. This was no more evident than through the GFC, when corporate Australia recapitalised through the equity markets rather than turning to investors in the domestic wholesale or retail bond markets.

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  • Unravelled: ASIC's proposed competition objective

    8 July 2014

    In its submission to the Financial System Inquiry, the Australian Securities and Investments Commission has proposed the addition of a statutory objective to enable ASIC to consider the impact of its decision making on competition when exercising its statutory powers and functions. This paper explores some of the potential implications if this proposal were to be accepted. It also considers ASIC's proposal within the broader context of the Harper review of competition policy currently underway, which may review ASIC's powers, functions and objects as part of its review of the institutional framework for competition regulation.

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  • Unravelled: Why CAMAC's final report might kickstart equity crowdfunding

    8 July 2014

    As you read this, the Melbourne-based makers of 'LazerBlade: the affordable laser cutter / engraver' are probably exchanging high-fives. Their Kickstarter project, seeking $45,000, has raised almost ten times that much. Soon, the project's backers hope to receive their LazerBlades – their pledges were effectively a pre-purchase of the product itself, a common model on crowdfunding platforms.

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  • Client Update: Senate report card on ASIC

    30 June 2014

    While the media has focused on the more sensational recommendations of last week's Senate report on the Australian Securities and Investments Commission, there are a number of other interesting comments and themes that provide some clues about future regulation by the Federal Government, surveillance by the commission and enforcement action. It also poses real questions about whether the Future of Financial Advice laws can have any real impact on vertically integrated businesses. The Allens Financial Services Regulation team considers some of the report's findings.

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  • Client Update: Government releases FOFA regulations

    30 June 2014

    The Government's much anticipated FOFA regulations were registered today and provide significant relief for benefits provided to employees and representatives of product issuers who provide general advice. They also expressly allow bonuses to be linked to successful product sales providing the bonus is not a 'commission', and the best interests duty also has been amended. There are many other amendments and a long Explanatory Statement traversing many of the most significant FOFA issues. But like the notes inserted by the regulations, an Explanatory Statement cannot amend the law. Partner Michelle Levy, Senior Associate Simun Soljo and Lawyer Rosie Thomas report.

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  • Client Update: Federal Government announces FOFA changes

    20 June 2014

    The Federal Government announced today that it will press ahead with changes to the future of financial advice provisions, initially by regulation and then by legislation (when it has a more sympathetic Senate). The announcement includes some key changes, including narrowing the proposed general advice exception from the bans on conflicted remuneration for employees of financial services licensees (such as banks). Employees who provide general advice in relation to products issued or sold by the licensee will be able to receive conflicted remuneration, provided that it is not commission. While the announcement will provide some comfort to the industry, it does little to alleviate uncertainty. Partner Michelle Levy and Senior Associate Simun Soljo report.

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  • Client Update: Senate releases report on FOFA Bill

    17 June 2014

    Last night the Senate Economics Legislation Committee released its report on the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014. The Committee's recommendations could lead to changes in the treatment of scaled advice and general advice. Partner Michelle Levy and Senior Associate Simun Soljo report.

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  • Unravelled: Disclosure: current complexity, future clarity?

    4 June 2014

    Since the 1996 Wallis Inquiry, disclosure has been at the heart of the regulatory philosophy for the retail financial services sector in Australia. Under the Financial System Inquiry's terms of reference, the Inquiry 'will refresh the philosophy, principles and objectives underpinning the development of a well-functioning financial system' and it is likely this will include a rethink of the role of disclosure. With this in mind, we take a look at the current disclosure regime and consider its likely future.

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  • Unravelled: What does 1 July 2014 mean under FoFA?

    4 June 2014

    For most people working in the financial services industry, it would be unwise to let 1 July come and go without asking, 'what will change?' In 2014, as in 2012 and 2013, 1 July is a very significant date under FoFA (the 'Future of Financial Advice').

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  • Unravelled: Rethinking Australia's regulatory approach to securitisation

    4 June 2014

    The Australian securitisation market was arguably more resilient than many during the GFC. However, certain regulatory and structural features of the Australian securitisation market have hampered its growth and the ability of Australian issuers to tap the full potential of investor demand.

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  • Unravelled: CAMAC is dead. Long live the FSI

    4 June 2014

    The recent Federal budget included measures to abolish some government bodies by 1 July 2015. One of those is the Corporations and Markets Advisory Committee (CAMAC). This is a pity for those involved in the funds management industry because it means that CAMAC is no longer accepting submissions in response to its thoughtful discussion paper on managed investment schemes. The discussion paper is a wide-ranging review, from the registration of schemes to their winding-up, and considers several bugbears of scheme operators and their advisers. It would be a matter of some regret if these were allowed to linger unaddressed for another 10 years.

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  • Unravelled: Will ASIC shift its regulatory focus from disclosure to suitability?

    4 June 2014

    The Financial System Inquiry (inevitably, the 'Murray Inquiry') is the successor of the Campbell Inquiry (1979-1981) and the Wallis Inquiry (1996-1997). Both the Campbell and Wallis reports considered that investors were best protected through disclosure and market integrity rules. Both reports assumed that adequate disclosure would result in efficient markets and efficient capital allocation: caveat emptor ('let the buyer beware').

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  • Unravelled: Superannuation retirement phase - lessons from recent UK annuity changes.

    4 June 2014

    A key risk faced by self-funded retirees is the possibility that their superannuation savings will not last as long as they will. While lifetime pensions and annuities issued by life companies can assist in addressing this risk, there has traditionally been a relatively low uptake of these products by retirees in Australia.

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  • Client Update: PPSA amendments for 'serial numbered goods'

    24 March 2014

    New legislation will amend the Personal Property Securities Act to remove the provision that deems leases of serial-numbered goods of more than 90 days to be a 'PPS lease'. These amendments will primarily benefit businesses in the leasing industry and will have a minimal, but positive, effect on financiers. Partner Andrew Boxall and Lawyer Daniel MacPherson report.

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  • Focus: CAMAC's 2014 discussion paper on managed investment schemes

    21 March 2014

    The Corporations and Markets Advisory Committee's discussion paper about the establishment and operation of managed investment schemes particularly examines governance, disclosure and regulatory issues. If the changes are implemented, it could profoundly affect these schemes. Partners Marc Kemp and Penny Nikoloudis and Lawyer Mark Boyagi outline the key changes suggested in the discussion paper.

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  • Client Update: FoFA Amendment Bill introduced into Parliament

    19 March 2014

    The Federal Government today introduced a Bill into Parliament to implement its proposed amendments to the Future of Financial Advice legislation. There are some significant differences between the Bill as introduced and the earlier exposure draft version released in January. The proposed reforms are intended to increase access to financial advice. There is a question as to whether the proposed reforms will achieve this and the effect they will have on the quality of advice. Senior Regulatory Counsel Michael Mathieson reports.

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  • Focus: Corporate responsibility and anti-corruption legislation in India

    10 February 2014

    In the past 12 months, the Indian Parliament has passed two important pieces of legislation relating to corporate social responsibility and the investigation of allegations of corruption made against public servants. Partner Rachel Nicolson, Senior Associate Dora Banyasz and Lawyer Harini Amarasinghe report.

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  • Focus: Anti-money laundering laws review announced

    8 January 2014

    A review of Australia's anti-money laundering and counter-terrorism financing laws will determine whether Australia can and should strengthen its response to money laundering and terrorism financing. Partner Rachel Nicolson and Lawyers Andrew Wilcock and Arlou Arteta report.

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  • Focus: ASIC releases long-awaited 'hedge fund' definition

    29 November 2013

    ASIC has now released its final policy on the new disclosure principles to apply to registered managed investment schemes classified as 'hedge funds'. ASIC's revised policy is intended to more appropriately refine the definition of 'hedge fund' to reduce the number of funds that might otherwise have triggered false positives. Partner Geoff Sanders and Senior Associate Janna Vynokur assess the impact of ASIC's final policy on the types of funds that will be captured by the 'hedge fund' definition.

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