Allens

Regulatory map

We are entering a period where financial institutions are facing unprecedented changes in their regulatory landscape. The Federal Government has announced significant reform proposals, which reflects the increasing scrutiny of the financial services sector. Managing regulatory compliance will become of greater importance going forward, which will affect almost all areas of banking.

Partner Michelle Levy (view CV), Senior Associate Katie Gardiner and Lawyer Jamil Diu summarise the expected developments below, which will continue to be monitored and updated.

November 2017

Strengthening penalties for corporate and financial sector misconduct – submissions closed 17 November 2017

On 23 October 2017, the ASIC Enforcement Review Taskforce released the Consultation Paper entitled 'Strengthening Penalties for Corporate and Financial Sector Misconduct'. The Taskforce proposes a number of changes to address the concern that penalties available to ASIC may not be effective as they do not 'reflect community perceptions as to the seriousness of engaging in certain forms of misconduct'. Notable proposals include allowing ASIC to seek engorgement remedies, broadening the range civil penalty provisions and increasing maximum penalty amounts in the Corporations Act, ASIC Act and National Consumer Credit Protection Act. Consultation for the Consultation Paper closed on 17 November 2017.

ASIC's Directions Powers – submissions closed 20 November 2017

On 8 November2017, the ASIC Enforcement Review Taskforce released its second Consultation Paper in two months entitled 'ASIC's Directions Powers'. The Consultation Paper considered ASIC's 'existing powers to modify an AFS or credit licensee’s ongoing systems and conduct after the relevant licence has been granted'. There were three issues identified by the Taskforce, including the amount of delay between ASIC identifying an issue and a protective outcome being achieved, and the Consultation Paper proposes to empower ASIC to direct licensees to take or refrain from taking actions where appropriate regarding their ongoing systems. The consultation period for the Paper ended on 20 November 2017.

BEAR – Report by the Economics Legislation Committee tabled on 24 November 2017

Following the consultation period for the exposure draft, the Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Bill 2017 was introduced and read in the House of Representatives on 19 October 2017. Allens' submission for the consultation can be found here. On 19 October 2017, the Senate referred the proposed Bill to the Economics Legislation Committee. Submissions to the Committee closed on 1 November 2017 and a report was tabled before Parliament on 24 November 2017.

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December 2017

Funds Management – consultation period ended on 8 December 2017

On 26 October 2017, ASIC released Consultation Paper 296 on 'Funds Management'. The Paper includes a number of draft Regulatory Guides related to managed investment schemes, corporate collective investment vehicles and passport funds. These draft Regulatory Guides have been proposed following the introduction of the exposure drafts for the Treasury Laws Amendment (Corporate Collective Investment Vehicle Bill 2017 and Corporations Amendment (Asia Region Funds Passport) Bill 2017. Issues covered by the draft Regulatory Guides include: establishing and registering a fund; constitutions; compliance and oversight; holding assets; discretionary powers; and foreign passport funds. ASIC sought feedback on the Paper and comments closed on 8 December 2017.

ASIC Fees-for-service Consultation Paper – submissions closed 15 December 2017

On 22 November 2017, the Treasury released its Consultation Paper on the 'Introduction of ASIC's Fees-For-Service Under the Industry Funding Model'. The fees-for-service model will be introduced on 1 July 2018 and is part of the recovery of ASIC's regulatory costs. The Paper adopts a number of submissions made in its previous consultation in 2015 including: a tiered fee system for many activities; and the removal of fees for novel relief applications. Interested parties were invited to provide submissions which closed on 15 December 2017.

New Code of Banking Practice – 2017 submitted to ASIC for approval on 19 December 2018

In February 2017, Phil Khoury completed his independent review of the Code of Banking Practice (the Code), which considered how the Code is meeting community expectations. The ABA  worked with stakeholders to draft a new Code based on the review and further consultation. A revised Code was submitted to ASIC for approval on 19 December 2018. Notable additions to the Code include a new section on small businesses and changes promoting product transparency for customers.

OECD Working Group Phase 4 evaluation of Australia's foreign bribery laws – report published on 14 December 2017

Australia is a signatory to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Australia has completed three phases of monitoring to ensure that legislation passed in relation to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions is appropriate and strictly enforced. The OECD Working Group on foreign bribery published its report on the Phase 4 evaluation on Australia on 14 December 2017. Key recommendations included: ensuring adequate resources to enforce and pursue foreign bribery offences; enhancing whistle-blowing protections in the private sector; and addresses the risk that the real-estate sector could be used for laundering foreign bribery.

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January 2018

Life insurance change to exemption against conflicted remuneration ban – commenced 1 January 2018

Legislation has been passed that limits the conflicted remuneration that can be paid to brokers in relation to certain life insurance products. 'Conflicted remuneration' refers to a benefit that could reasonably be expected to influence which financial products or financial product advice is given to retail clients.

We consider this development in our Unravelled publication.

Amendment of AMF/CTF Rules – amendments registered on 11 January 2018

The Anti-Money Laundering and Counter-Terrorism Financing Rules Amendment Instrument 2018 (No 1) was registered on 11 January 2018. These amendments aim to expand the exceptions applied to cases involving beneficial ownership and where a reporting entity is related to its customer. For example, the beneficial ownership exception has now been expanded to include majority-owned subsidiaries of foreign publicly-listed companies that are already subject to disclosure requirements.

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February 2018

Design and Distribution Obligations and Product Intervention Power Proposals – submissions closed 9 February 2018

In response to the Financial System Inquiry's recommendations to introduce a) design and distribution obligations for financial products to ensure they are targeted at the right people; and b) a temporary product intervention power for ASIC when there is a risk of consumer detriment, the Department of Treasury released the Design and Distribution Obligations and Product Intervention Power Proposals on 13 December 2016. On 21 December 2017, the Treasury released an exposure draft of the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2017. Proposed amendments include: imposing design and distribution obligations for financial products; and providing a temporary product intervention power for ASIC. Submissions from interested parties to the exposure draft closed on 9 February 2018.

Productivity Commission – review into competition in the Australian financial system – draft report published on 9 February 2018

Following the 2014 Inquiry into the Financial System (otherwise known as the Murray Inquiry), one recommendation was that the state of competition within the financial system should be reviewed once every three years. This followed concern that, the high concentration in certain areas of the financial system, such as retail banking and general insurance, would curtail the benefits of competition in the future. As a result, the Productivity Commission was tasked by the Treasurer to investigate competition in the financial system on 8 May 2017. The final report is expected to be handed down to the Federal Government by 1 July 2018. On 9 February 2018, the draft report was published which provided the Commission's proposed recommendations.

New Payments Platform – launched on 13 February 2018

The New Payments Platform (NPP) is an industry-led and funded initiative of open access infrastructure for Australian payments. APIs will connect to the NPP, to process fast, data-rich payments for their account holders at any time (including public holidays and outside business hours). For example, consumers may now transfer money instantly between accounts at different financial institutions. The NPP officially launched on 13 February 2018.

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March 2018

Asia Region Funds Passport – consultation period for exposure draft ended on 5 March 2018

Following an initial consultation in December 2017, the Government proposed a revised exposure draft for the Corporations Amendment (Asia Region Funds Passport) Bill 2018: Chapter 8A on 19 February 2018. The exposure draft proposes to amend the Asia Region Funds Passport regime by: making consequential amendments which provide parity between Passport funds and other managed investment products; provisions facilitating the deregistration of Australian and foreign passport funds; and consequential amendments extending consumer protection provisions to notified foreign passport fund product. Consultation for the exposure draft closed on 5 March 2018.

Financial Services Legislation Amendment (Crisis Resolution Powers and Other Measures) Act – commenced 5 March 2018

In response to the Financial System Inquiry's recommendations, the Government announced reforms providing more power to regulators in the event that a prudentially regulated financial entity failed. The Financial Services Legislation Amendment (Crisis Resolution Powers and Other Measures) Act enacts these proposals by strengthening APRA's powers to facilitate the orderly resolution of an ADI or insurer. These include, for example, enhancements to APRA's powers to wind-up regulated entities and its directions powers. The Act received Royal Assent on 5 March 2018 and the provisions took effect on the same day.

Treasury Laws Amendment (Banking Measures No. 1) Act – Non-ADI Lending Rules and Banking Act 1959 Objects Provision commenced 5 March 2018

The Treasury Laws Amendment (Banking Measures No. 1 ) Act seek to amend existing laws in relation to banking, insurance, credit, registrable corporations and financial system regulation. On 5 March 2018, the Act received Royal Assent and the following provisions commenced: the provision of additional powers for APRA to make regulations in respect of non-ADI lending activities; requirement for non-ADI lenders to register with, and provide data, to APRA; and insertion of an Objects Provision in the Banking Act 1959 to modernise the Banking Act. Credit card related reforms will commence either on 1 July 2018 or 1 January 2019 depending on the provision (see below).

Enhancing Whistleblower Protections – Economics Legislation Committee Report tabled 22 March 2018

The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 was introduced to the Senate on 7 December 2017 with a commencement date set as 1 July 2018. On 8 February 2018, the Senate referred to Bill to the Economics Legislation Committee for inquiry. The report by the Committee was tabled on 22 March 2018. Importantly, the Committee recommended that the Bill be passed and noted the Australian Competition and Consumer's view that passing the Bill would not preclude further development of whistle-blower protections. The Bill is currently at the Senate.

Foreign bribery – report released on 28 March 2018

The Senate Economic Reference Committee commenced an inquiry into, among other things, 'the measures governing the activities of Australian corporations, entities, organisations, individuals, government and related parties with respect to foreign bribery'. The final report was released on 28 March 2018 and contains 22 recommendations. The recommendations aim to improve Australia' anti-foreign bribery compliance and enforcement response by strengthening its legal framework against foreign bribery. Relevantly, the report recommends that the foreign bribery offence be amended, and a failure to prevent foreign bribery offence and a deferred prosecution agreement scheme be introduced. It also recommends that the facilitation payments defence be abolished.

Strengthening Superannuation Member Outcomes – consultation closed 29 March 2018

On 13 December 2017, APRA published its Discussion Paper on Strengthening Superannuation Member Outcomes alongside proposed amendments to the existing: Prudential Standards SPS 220 (Risk Management) and SPS 225 (Outcomes Assessment) and Prudential Practice Guides SPG 221 (Strategic and Business Planning) and SPG 225 (Outcomes Assessment). The proposed changes intend to improve accountability by RSE Licensees such as imposing more focus on expenses and requiring them to have a business plan. Allens produced a Client Update on this subject.

Consumer protection in the banking, insurance and financial sector – report due 30 March 2018

The Senate Economics References Committee has launched an inquiry into 'the regulatory framework for the protection of consumers', including the banking and financial sectors (among them, managed investment schemes). Submissions closed on 7 March 2017 and a report is due by 30 March 2018. We considered this development in our Unravelled publication.

Rationalisation of life insurance and managed investment scheme legacy products – report due by 31 March 2018

In response to the Financial Services Inquiry recommendation that there should be a mechanism to facilitate the rationalisation of legacy products in the life insurance industry, the Senate referred an inquiry into the life insurance industry to the Parliamentary Joint Committee on Corporations and Financial Services. Submissions closed on 18 November 2016 and the Senate was due to release a report on 31 October 2017 but this was extended to 7 December 2017 and then further extended to 31 March 2018. APRA has expressed its support in relation to the Financial Services Inquiry recommendation. We considered the proposed reform in further details in our Unravelled publication.

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April 2018

Anti-Money Laundering and Counter-Terrorism Financing Act 2017 – commenced 3 April 2018

The Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017 was introduced to Parliament on 17 August 2017 and follows the Government's recommendations made in the report on the statutory review of the Anti-Money Laundering/Counter-Terrorism Financing (AML/CTF) regime released by the Attorney-General's Department in April 2016.

The Bill was passed by both Houses on 7 December 2017 and received Royal Assent on 13 December 2017. The Act implements, among other things, the strengthening of AUSTRAC's investigation and enforcement powers, the regulation of digital currency exchange providers, such as Bitcoin, and the expansion of AUSTRAC's rule-making powers across a number of areas. The Act commenced on 3 April 2018.

ASIC Consultation Paper 298– Oversight of AFCA – consultation ended 6 April 2018

The ASIC released Consultation Paper 298 on 5 March 2018 relating to its oversight of AFCA. The Consultation Paper seeks feedback relating to financial firms and whether they require transitional relief from external dispute resolution (EDR) reporting obligations in the lead-up to AFCA. In addition, the ASIC sets out its approach to reporting requirements applicable to AFCA, role of AFCA's independent assessor, and the EDR reporting obligations. Submissions from the public closed on 6 April 2018.

Financial Services Royal Commission – Second Round of Hearings held on 16 April 2018

On 14 December 2017, Letters Patent were issued to the Honourable Kenneth Hayne AC QC for the establishment of a Royal Commission into alleged misconduct into the banking, superannuation and financial services industry (Terms of Reference for the Commission can be found here). The second round of public hearings was held on 16 April 2018 and focused on the financial planning and wealth management industry.

ASIC Enforcement Review Taskforce – Government response published on 16 April 2018

In December 2017, ASIC published the Enforcement Review Taskforce's report outlining its recommendations for the regulator's enforcement regime. Fifty recommendations were made in the report, including increasing civil penalties for individuals to $525,000 and companies to the greater of $10.5 million or three times the value of benefits obtained or losses avoided or 10% of annual turnover in the 12 months preceding the contravening conduct (capped at $210 million). The Government either agreed or agreed in-principle with all the recommendations, but listed a number for further consideration in light of the Financial Services Royal Commission.

Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 – report tabled on 20 April 2018

On 6 December 2017, the Minister for Justice introduced the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 into Parliament. The Bill introduced a deferred prosecution agreement scheme in Australia and a new offence of failure to prevent bribery by an associate. It also proposed amendments to the current foreign bribery laws. On 7 December 2017, the Senate referred the Bill to the Legal and Constitutional Affairs Legislation Committee for inquiry and a report was tabled on 20 April 2018.

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May 2018

Restricted Authorised Deposit-taking Institution Licensing – commenced 4 May 2018

On 4 May 2018, APRA announced the new restricted authorised deposit-taking (ADI) licensing framework effective immediately. The restricted ADI process allows institutions to conduct a limited, lower risk banking business with a view to obtaining an ADI licence.

Treasury Laws Amendment (Banking Measures No. 1) Act – Changes to Restricted Terms effective 5 May 2018

The Treasury Laws Amendment (Banking Measures No. 1) Act amends existing laws in relation to banking, insurance, credit, registrable corporations and financial system regulation. On 5 May 2018, authorised deposit-taking institutions (ADIs) will be permitted to use the word 'bank' without contravening section 66 of the Banking Act 1959 (Cth). APRA still retains the power to make a determination that an ADI or a class of ADIs are prohibited from using the word 'bank'.

Financial Services Royal Commission – Third Round of Hearings on 21 May 2018

On 14 December 2017, Letters Patent were issued to the Honourable Kenneth Hayne AC QC for the establishment of a Royal Commission into alleged misconduct into the banking, superannuation and financial services industry (Terms of Reference for the Commission can be found here). The third round of public hearings will be held on 21 May 2018 and focuses on lending to small and medium enterprises.

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June 2018

Review into the Competitiveness of the Super System – report due June 2018

The third stage of the Productivity Commission's review of the competitiveness and efficiency of Australia's superannuation system has kicked off, with an issues paper released for comment on 7 July 2017. Submissions closed on 21 August 2017. A draft report is due to be released in late May, and the date of the final report is yet to be determined. The inquiry will "make recommendations to improve outcomes for members and system stability as well as reduce barriers for competitiveness and efficiency of the system", using the criteria developed by the Productivity Commission in stages 1 and 2 of the inquiry.

As part of its review into the competitiveness of the super system, the Productivity Commission has also developed alternative models for allocating default fund members to products, with its final report originally due on 17 August 2017. The Treasurer has since agreed that the final report will not be issued separately, and will instead be incorporated into the third stage of the super system inquiry by June 2018. The developed model is intended to increase efficiency in the superannuation system, to maximise retirement incomes and optimise long-term net returns to its members. An issues paper and draft report on this subject have already been released, and submissions closed on 28 April 2017.

We considered the review in our Unravelled publication.

Prudential Standard CPS 234 Information Security – submissions close on 7 June 2018

On 7 March 2018, APRA released its draft Prudential Standard CPS 234 on Information Security. The draft Prudential Standard proposes to set minimum standards for financial institutions to maintain information kept on its systems and to safeguard against potential cyber-attacks. For example, APRA proposes to require entities to report within 24 hours of an information security incident which materially affects the entity or its customers. Submissions for the draft Prudential Standard close on 7 June 2018, and APRA intends on implementing the Standard from 1 July 2019.

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July 2018

BEAR – commencement on 1 July 2018 (and 1 July 2019 for small and medium ADIs)

The Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Bill 2017 was passed by both Houses of Parliament on 7 February 2018 and received Royal Assent on 20 February 2018. Allens' previous article on BEAR can be found here. The accountability requirements for large ADIs commence 1 July 2018, whereas small and medium ADIs do not have to oblige by BEAR's obligations until the following year on 1 July 2019.

Treasury Laws Amendment (Banking Measures No. 1) Act – Credit Card Reforms (part) commences 1 July 2018

The Treasury Laws Amendment (Banking Measures No. 1) Act will amend existing laws in relation to banking, insurance, credit, registrable corporations and financial system regulation. On 1 July 2018. the following provisions will commence: credit card providers will be prohibited from making any form of credit limit invitations (as opposed the current regime which captures only written invitations and provides an exemption if consent from the customer is obtained). The changes will only apply in relation to communications given on or after 1 July 2018.

Productivity Commission – review into competition in the Australian financial system

On 8 May 2017, the Treasurer requested the Productivity Commission to conduct an inquiry into the Australian financial system. Specifically, the Commission is to consider competition in the financial system with a view to improving consumer outcomes, productivity and competitiveness, and supporting financial system innovation while balancing financial stability objectives. The final report is expected to be handed down to the Federal Government by 1 July 2018.

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September 2018

Financial Services Royal Commission – interim report due 30 September 2018

On 14 December 2017, Letters Patent were issued to the Honourable Kenneth Hayne AC QC for the establishment of a Royal Commission into alleged misconduct into the banking, superannuation and financial services industry. The Terms of Reference for the Commission can be found here. The Commission has been required to submits its Interim Report by 30 September 2018.

November 2018

Australian Financial Complaints Authority – commences by 1 November 2018

The Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017 received Royal Assent on 5 March 2018, The Act establishes the Australian Financial Complaints Authority (AFCA), to replace the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal. The Minister for Revenue and Financial Services announced on 5 March 2018 that the AFCA will commence receiving consumer and small business disputes no later than 1 November 2018. All Australian Financial Services Licensees, Australian Credit Licensees, superannuation trustees and other financial firms must become members of AFCA by 21 September 2018.

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On the Horizon for 2018

Superannuation (Objective) legislation expected – Bill introduced to Parliament on 9 November 2016

Following on from recommendations arising out of the Financial System Inquiry, the Superannuation (Objective) Bill 2016 was developed to enshrine the objective of the superannuation system. After a consultation period, a report was released on 14 February 2017. The Bill is currently at the Senate but has not progressed since the second reading was moved on 23 November 2016. The legislation is expected to commence on whichever is first out of 1 January, 1 April, 1 July or 1 October after the day the legislation receives Royal Assent. We considered the Bill in our Unravelled publication.

Extending crowd-sourced equity funding to proprietary companies – Bill introduced to Parliament on 14 September 2017

Crowd-sourced equity funding (CSEF) allows many individuals to invest small amounts in exchange for an equity stake in a company. A CSEF regime for public companies will commence on 29 September 2017. The Government released draft legislation and a draft explanatory memorandum in relation to extending CSEF to proprietary companies, which should assist startups and small businesses to access capital. Submissions on the draft legislation closed on 6 June 2017. On 14 September 2017, the Treasurer introduced the Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Bill 2017 to the House of Representatives. The Bill passed the House of Representatives on 26 February 2018 and is had its Second Reading moved in the Senate on 19 March 2018. Once passed, the CSF framework will be extended to eligible proprietary companies after six months from the date of the Act receiving Royal Assent.

Strengthening Trustee Arrangements for Registrable Superannuation Licensees – Bill introduced to Parliament on 14 September 2017

The Superannuation Laws Amendment (Strengthening Trustee Arrangements) Bill 2017 was introduced to the Senate on 14 September 2017 with a commencement day set as the day after receiving Royal Assent. The proposed amendment follows the 2014 Financial System Inquiry Report and the 2010 Review of the Governance, Efficiency, Structure and Operation of Australia's Superannuation System, both of which considered that greater independence on superannuation trustee boards was desirable. If passed, the RSEs will be required to have at least one-third independent directors and the Chair of the Board of Directors must be one of these independent directors. The second reading was moved on 14 September 2017 and the Bill is currently still being debated before the Senate but has not progressed since December 2017.

Enhancing Whistleblower Protections – Bill introduced to Parliament on 7 December 2017

The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 was introduced to the Senate on 7 December 2017 with a commencement day set as 1 July 2018. The Bill proposes to introduce a whistleblower protection regime for the financial and corporate sectors and to create a whistleblower regime for individuals who disclose entities' breaches of tax laws or misconduct.

Asia Region Funds Passport – Bill introduced to Parliament on 28 March 2018

The Corporations Amendment (Asia Region Funds Passport) Bill 2018 was introduced to the House of Representatives on 28 March 2018, with a commencement date either to be fixed by proclamation or six months after the day of Royal Assent. The Bill follows the Memorandum of Cooperation on the Establishment and Implementation of the Asia Region Funds Passport on 30 June 2016 between Australia, Japan, Korea, New Zealand and Thailand. If the Bill is enacted, eligible funds will be permitted to be offered across the participating nation's economics under a common set of regulatory requirements – thereby reducing barriers to entry for eligible funds. The Bill was considered by the Senate Standing Committee on 9 May 2018 and is currently before the House of Representatives.

Introduction of the Modern Slavery Act in Australia – legislation expected mid-2018

Submissions for the 'Inquiry into Establishing a Modern Slavery Act in Australia' concluded in October 2017. In its Interim Report published in August 2017, the Committee recommended the adoption of supply chain reporting requirements provided in-principle support for the implementation of the Modern Slavery Act in Australia. These recommendations were repeated in the Joint Standing Committee on Foreign Affairs, Defence and Trade's Final Report which was tabled to Parliament on 7 December 2017. On 9 May 2018, the Department of Home Affairs announced the Government's intention of introducing legislation to Parliament to enact a Commonwealth Modern Slavery Act by mid-2018. The reporting requirements are expected to apply to entities with at least $100 million annual consolidated revenue.

Mortgage Pricing Inquiry – expected after June 2018

In conjunction with the Major Bank Levy, over the next 12 months the ACCC will undertake a mortgage pricing inquiry, which will require banks to explain any changes to residential mortgage pricing. The inquiry will relate to prices charged until 30 June 2018. On 31 March 2018, ACCC published its interim report which outlined the regulator's preliminary views including, for example, a lack of vigorous price competition between the inquiry banks and opaque discretionary discounts.

Open banking data regime – implementation to commence from July 2019

On 31 March 2017, the Productivity Commission handed down its final report into data availability and use to the Federal Government. Treasurer Scott Morrison indicated in the 2017 budget that the Government will implement 'a new open banking regime to give customers control of data about them and facilitate choice between products and providers'. On 9 May 2018, the Treasurer announced that Open Banking will be phased in from July 2019 with all major banks to make data available on credit and debit card, deposit and transaction accounts. Remaining banks will be required to implement Open Banking with a 12-month delay. This will be followed by data relating to mortgages from 1 February 2010, and all other identified products by 1 July 2020.

ACCC to undertake regular inquiries into financial system competition issues

Following on from two reports released by the House of Representatives Standing Committee on Economics, the Government announced in the 2017–2018 budget that it will provide funding to the ACCC to establish a unit 'to undertake regular inquiries into specific financial system competition issues'. We considered the ACCC inquiries in our Unravelled publication. The Financial Services Unit was established in response to the Government's mandate. A Residential Mortgage Price Inquiry is currently being undertaken, and the Financial Services Unit is expected to commence market studies, particularly in the area of financial services markets, from July 2018.

Anti-Money Laundering/Counter-Terrorism Financing – Phase 2

Consultation continues this year on the implementation of recommendations made in the report on the statutory review of the Anti-Money Laundering/Counter-Terrorism Financing (AML/CTF) regime released by the Attorney-General's Department in April 2016. The Project Plan released for consultation in late 2016 for implementation of those recommendations has now been finalised.

Phase 1 was completed with the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2017 (see above at June 2018).

Phase 2 of the Project Plan focusses on significant reforms to simply, streamline and clarify AML/CTF obligations and strengthen compliance with Financial Action Task Force standards. These will be implemented through to 2019. A consultation period commenced from July 2017 through to 2018, with an indicative restructure of the Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) being released for consultation on 24 July 2017. We reported on the content of the Project Plan in more detail in our Focus: Road map to anti-money laundering and counter-terrorism financing reform

Improved consumer outcomes for mortgage broking

ASIC released a report in March 2017 on remuneration arrangements within the mortgage broking industry. It made a number of proposals (including changes to the standard commission model and bonuses, improving oversight of brokers by lenders, and establishing a public reporting regime in relation to competition and consumer outcomes in the home loan market). ASIC proposes to implement these initiatives before a further review of the market is conducted in three to four years.

Monitoring leverage and risk within the superannuation system

In 2015, as part of its response to the Financial Services Inquiry, the Government commissioned the Council of Financial Regulators and the ATO to monitor leverage and risk in the superannuation system and report back in three years' time. The Government did not agree with the Financial Service Inquiry's recommendation to prohibit limited recourse borrowing by superannuation funds, on the basis that the data provided was insufficient to justify any intervention.

Small amount credit contract laws

An Exposure Draft (National Consumer Credit Protection Amendment (Small Amount Credit Contract and Consumer Lease Reforms) Bill 2017) was published by the Treasury on 23 October 2017. The consultation period concluded on 3 November 2017.

Recommendation 19, which the Government supports in full, states that:

ASIC should continue its discussions with … banking institutions… with a view to ensuring that ePayment Code protections are retained when consumers provide their bank account log-in details in order for a SACC provider to comply with their obligation to obtain 90 days of bank statements.

A private member's bill, which broadly reflects the Exposure Draft, was introduced into Parliament on 26 February 2018 and Second Reading Debate continued on 26 March 2018.

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January 2019

Treasury Laws Amendment (Banking Measures No. 1) Act – Credit Card Reforms (remainder) commences 1 January 2019

The Treasury Laws Amendment (Banking Measures No. 1 ) Act will amend existing laws in relation to banking, insurance, credit, registrable corporations and financial system regulation. On 1 July 2018. the following provisions will commence: prohibition on offering unsolicited credit card limit increases; simplification of interest charge calculations; and allowing consumers to reduce credit limits and terminate credit contracts online.

Professional standards of financial advisers – regime to commence 1 January 2019

Following recommendations in 2014 from the Parliamentary Joint Committee to lift standards in the financial advice sector, the Government passed legislation amending the Corporations Act 2001 (Cth), which commenced on 15 March 2017. Starting 1 January 2019, financial advisers will be required to meet higher educational requirements, have a code of ethics and undertake supervision. Employers of financial advisers will be responsible for ensuring that their employees meet educational requirements and abide by a code of ethics.

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February 2019

Financial Services Royal Commission – final report due 1 February 2019

On 14 December 2017, Letters Patent were issued to the Honourable Kenneth Hayne AC QC for the establishment of a Royal Commission into alleged misconduct into the banking, superannuation and financial services industry. The Terms of Reference for the Commission can be found here. The Commission has been required to submits its Final Report by 1 February 2019.

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