ASIC to increase surveillance to monitor compliance with PI insurance requirements AFS licensees should check their PI policy to determine whether cover is adequate Insurers should review their PI offerings to ensure cover is compliant with RG 126 Following an eight month review, ASIC has released its findings on the PI insurance market and areas … Continue Reading
The drive towards automated financial services will gather pace in 2016 and here’s the next opportunity to influence the debate. After updating its relief to better facilitate electronic delivery of mandated disclosure and the use of innovative product disclosure statements (see RG 221), ASIC has released Consultation Paper CP 249 Remaking ASIC class order on generic … Continue Reading
This blog post was co-authored by Phoebe Saintilan The ‘Paris Agreement’ was adopted on 12 December 2015 at the COP 21 UN Climate Change Conference (Conference). It may potentially herald the end of the fossil fuel era and a global move towards a low carbon future and renewable energy. This will undoubtedly influence the decisions … Continue Reading
Greg Medcraft made some very encouraging impromptu comments at the COALA/CBA Blockchain Workshops conference in Sydney on 10 December that are consistent with the renewed push to facilitate technology-led innovation in Australia. Mr Medcraft indicated that the Australian Securities and Investments Commission (ASIC) is willing to support the modification of Australian law to the extent … Continue Reading
Just as telematics has been supplementing motor vehicle insurance underwriting, Australia’s health and life insurance markets are embracing innovative technologies in the form of “wearables”. Underwriters traditionally rely on pre-policy questionnaires and proposal forms to assess risk and set the terms of cover they will accept; however, the information that can be obtained provides only … Continue Reading
APRA’s discussion paper and proposed new APS 120 provide some welcome clarification and concessions for Australian market participants. Released on Thursday 26 November 2015, the proposals will be open for comment until 1 March 2016. The proposed effective date for these rules in 1 January 2018. Amongst the more important proposals are: De-facto master trust … Continue Reading
The Government’s response to the FSI contains both good and bad news for insurers and brokers One issue of concern is the proposal that ASIC must approve all changes in control of AFS Licensees. This will significantly expand such regulatory oversight beyond authorised insurers to a multitude of insurance brokers and underwriting agencies. The good … Continue Reading
Government releases its Response to FSI Final Report. The Australian Government has released its Response to last December’s Final Report of the Financial System Inquiry or ‘Murray Inquiry’. The Government appears to have accepted almost all of the Inquiry’s recommendations and has also proposed additional measures that are consistent with the Murray Inquiry’s underlying philosophy. … Continue Reading
The Government has given its support to a “user pays” industry funding model for ASIC in line with the recommendations of the Financial System Inquiry (FSI). A consultation paper has been issued today by Assistant Treasurer, Josh Frydenberg, detailing how the funding model will work. The new funding model will require the biggest users of … Continue Reading
ASIC continues to reshape its approach to enforcement, with the focus on disclosure having shifted sharply in the last year to a focus on delivering better consumer outcomes. In the last 12 months, we have been discussing ASIC’s use of behavioural economic theory and the spectre of UK regulation that underpins ASIC’s drive towards product … Continue Reading
The Australian Senate Economics Reference Committee released its long-awaited report into the digital currencies on 4 August 2015. Digital currencies and blockchain technology is hot news. For many, the blockchain sensation is reminiscent of the early days of the internet. We have even seen trialling of blockchain technology and some bitcoin sector investment by Australian … Continue Reading
On 8 July the Basel Committee (BIS) issued a paper setting out 13 corporate governance principles for banks. These principles supersede the 2010 BIS principles and are to be applied and adapted by national bank regulators as they see fit. This work has been some time in the making with a peer review conducted by … Continue Reading
Conducting investigations into allegations of regulatory breaches, fraud or corruption can present serious legal and commercial risk if privilege cannot be asserted over the findings of those investigations. That risk may be compounded if boards choose to conduct such investigations in-house, often with compliance managers or in-house counsel reporting the findings of those investigations directly … Continue Reading
Credit card providers have agreed to provide customers with clearer information regarding when ‘complimentary’ travel insurance is activated and to what extent cover is provided. Many credit card holders have access to ‘complimentary’ travel insurance. However, many of these do not know that they have the benefit of cover, how to activate it, how it … Continue Reading
We are on the cusp of a new era in the evolution of the financial services industry. New technology, data analytics and behavioural economics are promising to revolutionise the customer experience. If the regulators remove the regulatory barriers, then using multi-media to deliver mandated and voluntary disclosure in different formats and through different devices will … Continue Reading
Technology led innovation can cause much indigestion for conduct and prudential regulators as they try to find the right regulatory pigeion hole for innovators in their regimes that were not built to handle such innovation. It is this disruptive impact of innovation that is shaping the regulation of tomorrow. Numerous conduct regulators around the world have acknowledged that a mandatory … Continue Reading
Financial Institution Symposium Technology-led innovation has the potential to truly disrupt existing business models and distribution channels in the financial services industry. In Australia and more broadly, we have seen start-ups build innovative payment systems, peer-to-peer lending platforms, crypto-currencies, robo-advice and automated investment management. However, the large institutions are well capitalised, have large customer bases … Continue Reading
Recent enforcement action by ASIC against collapsed payday lender, the Cash Store Pty Ltd (TCS), has put the sale of consumer credit insurance (CCI) into sharp focus. On 19 February 2015, the Federal Court awarded penalties against TCS and its loan funder, Assistive Finance Australia Pty Ltd (AFA) of almost $19 million. It found that … Continue Reading
On 2 February 2015, the Australian Securities and Investments Commission (“ASIC”) issued a class exemption which seeks to provide guidance to foreign entities about when they will be regarded as having “entered into” an OTC derivative in Australia for the purposes of the ASIC Derivative Transaction Rules (Reporting) 2013 (“Australian DTRs”), as such OTC derivatives … Continue Reading
The FSI referred to studies undertaken after natural disasters revealing inadvertent underinsurance due to consumers struggling to make an informed decision about the sum insured. Survey results highlight that even when consumers take the time to read insurance documentation, including the product disclosure statement, many misunderstand it, scan it briefly due to over-reliance on sales … Continue Reading
The FSI has recommended that the competency of financial advice providers be raised and an enhanced register of advisers introduced. The Government is currently considering mechanisms to raise minimum education requirements for financial advisers and the FSI recommends that this be prioritised. The FSI found that the minimum standards are currently too low which affects … Continue Reading
The FSI identified the need to better align the interests of financial services providers with those of consumers to ensure better consumer outcomes. The following strategies have been recommended to address some underlying issues: Raising standards of conduct and levels of professionalism: This aims to address concerns regarding organisational cultures that do not focus on … Continue Reading
The FSI has recommended that ASIC be granted a product intervention power to enable it to take a more proactive approach to reducing the risk of significant detriment to consumers. Specifically, this new power would allow the regulator to intervene to require or impose: amendments to marketing and disclosure material; warnings to consumers, and labelling … Continue Reading
The FSI shares concerns raised by ASIC that consumers are buying products that do not match their needs. The existing regulatory framework relies heavily on disclosure, financial advice and financial literacy. However, disclosure can be ineffective for a number of reasons, such as complexity of documents and misaligned interests. The FSI also considers that current … Continue Reading
