In the area of financial regulation the themes of regulatory changes, consumer protection, competition, risk management and technology change will continue in the second half of 2015.
This graphic is a summary of the current issues (click to enlarge).
Looking back at review reports delivered in the first half of 2015, we are waiting for the government’s response to the Financial System Inquiry report, the Competition Review report and the tax review in particular. All involve complex policy issues for the financial services sector including further regulation of financial advice, life insurance commissions, superannuation fund governance and the possible imposition of a bank deposit levy.
The government is also considering its response to the Personal Property Securities Act review.
Financial services businesses must consider the impact on their customers when designing new products and reviewing remuneration structures.
The government’s response to various reports will determine whether new compliance projects will be required to implement changes.
Cyber resilience, the way companies deal with data breaches and privacy security, has been identified by ASIC as an important issue. The government is still deciding whether to make notification of data breaches mandatory and if so under what conditions.
ASIC is continuing its surveillance and enforcement programs and is emphasising the importance of corporate culture as a factor in compliance.
Areas ASIC is planning to target include:
• remediation policy and procedures
• reward and incentive structures, including promotions
• recruitment and training policy
• whistleblowing policy
• conflicts of interest
• nature and level of complaints and complaints handling
• staff engagement
• corporate governance framework to support customer-centric culture (e.g. board oversight over product approval processes).
In the area of consumer credit, ASIC is continuing its focus on responsible lending particularly for small amount loans and consumer leases.
The Government has also introduced legislation to extend the consumer unfair contract term protections to small businesses.
The amendments to the ASIC Act will apply the new provisions to standard form contracts for financial products and financial services to small businesses from 2016.
As econveyancing develops, new verification of identity requirements for mortgagors are being finalised
The transition period for implementation of the new AML/CTF additional customer due diligence requirements ends on 31 December 2015.In the meantime Austrac has announced its intention to relax some requirements by amending the electronic safe harbour procedure for customers, permitting the collection of identification information from sources other than the customer, and extending current customer identification exemptions.
The value of a penalty unit for Commonwealth offences will increase from $170 to $180 from 31 July 2015. From now on indexation will occur on 1 July every three years, with the first indexation occurring on 1 July 2018.
The unclaimed money laws have changed: from 31 December 2015 the unclaimed moneys period the Banking Act and the Life Insurance Act will extend from three years to seven years.
But uncertainty continues about the future of the Office of the Australian Information Commissioner and the Australian Charities and Not-for-profits Commission.
Summing up, regulatory change is continuing.
