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

  • Unravelled: 2017 Budget: increased scrutiny on competition in the financial system

    7 June 2017

    The financial services sector has been under scrutiny for some time with many different voices clamouring for further regulation or inquiries in a sector that is already highly regulated. The recent Federal Budget included a number of measures focused on the state of competition in the financial system, and provided a road map for a significant amount of activity over the next few years. Partner Carolyn Oddie reports.

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  • Unravelled: Can super really help housing affordability (and I have not asked should it)?

    7 June 2017

    The 2017 Budget included proposals intended to 'reduce pressure on housing affordability'. Two of them use the superannuation system to do so: the 'First Home Super Saver Scheme' and the 'Reducing Barriers to Downsizing' proposal. Partner Michelle Levy examines the schemes in more detail.

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  • Unravelled: Banks set to grin and BEAR new measures to improve individual accountability

    7 June 2017

    As part of its ongoing efforts to improve the domestic banking sector's accountability, the Federal Government recently announced a series of measures to join the ongoing global push seeking to improve measures for individual accountability for misconduct. The proposed Banking Executives Accountability Regime (BEAR) seeks to ensure that banks, and their senior management, are held accountable when they fail to meet expectations. Senior Associate Sarah Burgemeister reports.

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  • Focus: Anti-money laundering and counter-terrorism financing: Key questions for boards and executives in 2017

    16 May 2017

    Australian boards and senior executives are expected to maintain oversight of risk and compliance issues including bribery, sanctions, human rights and anti-money laundering. In-house counsel perform a central role in supporting this oversight and maintaining compliance. In the fourth of a five-part series, Partner Peter Haig and Associates Andrew Shetliffe and Glyn Ayres look at the key questions that Australian boards and senior executives should be asking about anti-money laundering and counter-terrorism financing in 2017.

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  • Client Update: 2017 Budget: increased scrutiny on competition and accountability in the financial system

    10 May 2017

    Treasurer Scott Morrison this week announced that he has tasked the Productivity Commission to review the state of competition in Australia's financial system. The Budget has also included other measures focused on competition in the financial sector, including funding to establish a dedicated ACCC unit to undertake regular inquiries into specific financial system competition issues, an ACCC inquiry into residential mortgage pricing, and an open banking regime. The Government has also announced the introduction of a Banking Executive Accountability Regime. These measures follow a series of recent reviews and inquiries into the financial services industry. Partner Carolyn Oddie and Senior Associate Lisa Lucak report.

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  • Unravelled: CIPRs - some interesting findings

    5 May 2017

    We recently hosted some workshops in Sydney and Melbourne to discuss the proposed CIPR framework. The outcomes of those workshops were interesting - in some respects surprising - and this article provides a brief report.

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  • Unravelled: Recent decision on FoFA advice provisions - ASIC v NSG

    5 May 2017

    The recent case of ASIC v NSG Services Pty Ltd considers the FoFA best interests and appropriate advice provisions, as well as obligations of licensees. While the facts of the case provide an extreme example of how advisers and licensees can fail to comply with these duties, it also provides some useful judicial commentary on the provisions.

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  • Unravelled: Reporting significant breaches - or something that may (or may not) be a breach?

    5 May 2017

    The Taskforce established by Treasury to consider ASIC's enforcement powers released its first consultation paper a few weeks ago on breach reporting. We examine the most significant of the Taskforce's 12 'preliminary positions'.

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  • Unravelled: ASIC's report on financial advice

    7 April 2017

    ASIC has recently released a report about its work with the big four banks and AMP on adviser misconduct. The report is essentially an update on the progress of ASIC's Wealth Management Project, and mostly contains information we already know. The most interesting part deals with the results of ASIC's review of adviser audit processes by the banks and AMP. They indicate that internal audits are not identifying compliance issues.

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  • Unravelled: A step closer to industry funding of ASIC

    7 April 2017

    Last week, the Federal Government moved another step closer to implementing an industry funding model for the recovery of ASIC's costs, by introducing the ASIC Supervisory Cost Recovery Levy Bill 2017 (as well as two related Bills) into Parliament. These Bills implement the recommendations of the Financial Services Inquiry and the Senate Economics Committee that ASIC be industry funded, and follows a number of rounds of industry consultation on exposure drafts and proposal papers.

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  • Client Update: Productivity Commission's proposed alternate default models for superannuation

    30 March 2017

    In the latest (and undoubtedly most significant) of its reports into the design of default superannuation arrangements in Australia, the Productivity Commission yesterday released its Draft Report in relation to Superannuation: Alternative Default Models. Partner Geoff Sanders of the Allens Superannuation team reports on how the Draft Report moves the Commission's thinking forward in relation to how default contributions might be allocated to superannuation products in the years to come.

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  • 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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