Parliament to resume to pass Jobkeeper legislation

Businesses significantly affected by the Coronavirus shutdowns will be able to access a wage subsidy to continue paying their employees. Under the JobKeeper program, businesses will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum of six months. Details.

The legislation will be introduced into Parliament on 8 April and is expected to pass that day.

No other sittings are scheduled until 11 August 2020.

Small Business Credit Coronavirus Regulations

The National Consumer Credit Protection Amendment (Coronavirus Economic Response Package) Regulations 2020 were registered on 2 April 2020.

UPDATE: National Consumer Credit Protection Amendment (Responsible Lending Obligations) Regulations 2020 extends this relief to 2 April 2021.

The Regulations to temporarily exempt credit licensees from certain responsible lending obligations.

The exemption applies:

• in relation to new credit, credit limit increases, variations and restructures, suggestions to remain in credit contracts, and the lease of consumer goods;
• where a consumer is a person who operates a small business and is an existing borrower customer (or was a borrower customer in the last year); and
• for all types of credit or leased goods which are in part used for business purposes.

The exemption is temporary and applies for a period of 6 months only.

The exemption applies for all kinds of credit products, including personal loans, credit cards and loans secured by the borrower’s home.

Some obligations are unaffected by the Regulations including, for example, the requirements to provide a credit guide and product disclosure document, and to give quotes for the cost of credit assistance, to the extent that such obligations apply.

Consumers whose purposes are entirely personal, household or domestic are not affected by this exemption. The responsible lending obligations continue to apply fully to those consumers.

ACCC interim authorisation for insurers’ small business relief package

The ACCC has given interim authorisation to Suncorp, Allianz, and QBE Insurance for their small business relief package, as well as any other insurers or insurance brokers who choose to take part, as long as they notify the ACCC.

The package includes a range of measures, including that existing eligible business customers suffering hardship as a result of the COVID-19 pandemic are able to defer their insurance premium payments for up to six months. The package will apply to insurance premiums that fall due up until 30 June 2020.

Eligible business customers will also be refunded unused premiums for any insurance policy they need to cancel as a result of the pandemic, and will not be charged administration or cancellation fees if they do.

All policyholders, including consumers, eligible small businesses and larger businesses, who cancel travel plans will be able to get a credit or refund for any unused travel insurance premiums, again without administration or cancellation fees.

APRA changes in reporting obligations for ADIs and RFCs

The Australian Prudential Regulation Authority (APRA) has announced temporary changes in reporting obligations for all authorised deposit-taking institutions (ADIs) and registered financial corporations (RFCs) in response to COVID-19.

The changes, which have been made in collaboration with the Reserve Bank of Australia and the Australian Bureau of Statistics, are intended to balance the need for entities to dedicate time and resources to maintaining their operations and supporting customers, against the increased need for timely, accurate data for use in the rapidly changing environment.

In summary, the changes are:

• granting a temporary extension of the notification period for changes to accountability statements and maps under the Bank Executive Accountability Regime (BEAR): Banking (BEAR) determination No. 1 of 2020;
• the introduction of a new reporting standard for ADIs and RFCs regarding lending to small and medium enterprises (SMEs), to support the Commonwealth Government’s Coronavirus SME Guarantee Scheme;
• early implementation of APRA’s November 2019 proposal to standardise reporting due dates for ADI quarterly forms, only where that represents an extension of due dates, and extending this to RFCs;
  deferral of the introduction of certain new reporting standards until the March 2021 reporting period;
• deferral of APRA’s proposal to determine certain ADI data non-confidential until further notice; and
• a continuation of parallel reporting of Reporting Standards ARS 331.0 Selected Revenues and Expenses (ARS 331.0); RRS 331.0 Selected Revenue and Expenses (RRS 331.0) and the ABS Quarterly Business Indicators Survey (QBIS) until the June 2020 quarter.

APRA and ASIC guidance to superannuation trustees on COVID-19

APRA and ASIC have given joint guidance to superannuation trustees to help them manage the financial and operational challenges associated with COVID-19 while continuing to meet their obligations to look after members’ best interests.

Along with the letter, APRA and ASIC have both released “frequently asked questions” (FAQs) documents, containing more detailed information for trustees.

The statement says “The unusual and challenging circumstances associated with COVID-19 require trustees to make new business arrangements, amend priorities and adjust their short-term investment strategies. What does not change is their duty to comply with the law, including the duty to act in the best interests of their members. At a time of uncertainty, this is essential to maintaining public confidence that superannuation remains a safe, fair and sound long-term investment towards retirement.”

APRA and ASIC also say that liquidity must also be a top priority for trustees, who bear ultimate responsibility for maintaining sufficient levels of liquidity to sustain the operation of their funds.

Trustees should be:

• undertaking regular and detailed liquidity stress testing, ensuring that scenarios reflect changes in future net cash flows of the RSE, member behaviour and market conditions;
• identifying specific areas for heightened attention with respect to liquidity, such as increased member switching activity or deterioration in the liquidity profile of their investments, and taking appropriate action;
• assessing the impact on liquidity of their liabilities and contractual commitments, such as currency hedging programs, and reviewing their securities lending arrangements.

Trustees should also ensure that the valuation of unlisted and illiquid assets remains appropriate and consider whether any assets need to be revalued.

AUSTRAC COVID-19 update on the early release of super initiative

In response to the COVID-19 pandemic, AUSTRAC has announced it will introduce a Rule under the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF).

This Rule will ensure that superannuation funds making payments to their members under this initiative, where the payment is approved by the ATO and processed through My Gov and ATO online, will not have to conduct additional customer verification under the AML/CTF regime.

APRA regulatory approach to RBA Term Funding Facility

APRA has confirmed its regulatory approach to the Term Funding Facility (TFF) announced by the Reserve Bank of Australia (RBA) on 19 March 2020.

The TFF provides ADIs with access to three-year funding at a low-interest rate, and provides additional incentives for lending to businesses, with a particular emphasis on lending to small and medium-sized enterprises.

A core component of the TFF is the RBA’s commitment to making funding available to ADIs equivalent to 3 percent of an ADI’s total credit outstanding to Australian resident households and (non-related) businesses (the Initial Allowance). APRA will allow ADIs to include the benefit of the Initial Allowance in the calculation of the Liquidity Coverage Ratio, Minimum Liquidity Holdings Ratio and Net Stable Funding Ratio from 31 March 2020, to the extent they have the necessary unencumbered collateral to access the facility.

AUSTRAC COVID-19 update: Compliance Report 2019 lodgment extension until 30 June 2020

The Compliance Report 2019 is due to be submitted to AUSTRAC by 31 March 2020. AUSTRAC has announced it will be accepting 2019 compliance reports until 30 June 2020, without risk of compliance action.

APRA announces deferral of capital reform implementation

APRA has announced it is deferring its scheduled implementation of the Basel III reforms in Australia by one year.

The announcement does not impact the level of capital ADIs are required to hold, but rather defers adjustments to the re-allocation of capital across various portfolios.

The affected standards and their revised implementation dates are as follows:

APS 110 Capital Adequacy: 1 January 2023
APS 112 Capital Adequacy: Standardised Approach to Credit Risk: 1 January 2023
APS 113 Capital Adequacy: Internal Ratings-based Approach to Credit Risk: 1 January 2023
APS 115 Capital Adequacy: Standardised Measurement Approach to Operational Risk: 1 January 2023
APS 116 Capital Adequacy: Market Risk: 1 January 2024
APS 117 Capital Adequacy: Interest Rate Risk in the Banking Book: 1 January 2023
APS 330 Public Disclosures: 1 January 2023.

AOFM and the Structured Finance Support Fund

The Australian Office of Financial Management has published its guidelines on accessing the Structured Finance Support Fund.

The Structured Finance Support Fund (SFSF), initially consisting of $15 billion, is intended to enable the Government to support continued access to funding markets for small and medium enterprises (SMEs) impacted by the economic effects of the Coronavirus, and to mitigate impacts on competition in consumer and business lending markets.

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