Australia

Topic: General

Subscribe to General RSS feed

Reinsurance in a world of natural disasters

With the flood of recent natural disasters, APRA has clarified the type of aggregate reinsurance arrangements that require its approval.  Accordingly, it is timely for insurers to review their reinsurance arrangements to determine whether such approval is required. In recent years, Australia and New Zealand have amply demonstrated their propensity for catastrophic losses flowing from … Continue Reading

Financial Services Tomorrow…

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

Regulatory disruption

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

Innovation and Disruption

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

Court finds unconscionable conduct in sale of CCI

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

ASIC-run home insurance comparison website opens for business

The Federal Government’s novel approach to tackling housing insurance affordability issues in North Queensland continued this week with the unveiling of ASIC’s home insurance comparison website. Replete with disclaimers and emphasising product features over policy price, the website is intended to aid consumer understanding and decrease underinsurance in a market struggling under flood and wind … Continue Reading

ASIC runs over No Claims Discount schemes

The Australian Securities & Investments Commission (ASIC) has continued its campaign for improved disclosure by insurers and their agents – this time in the motor vehicle insurance sphere. On 26 February 2015, ASIC published a report that examines the operation of no-claims discount (NCD) schemes for motor vehicle insurance and concluded that the schemes do not … Continue Reading

Enforceable undertakings – ASIC to make experts’ findings available to the public

On 19 February 2015, we reported on ASIC enforcement actions in the second half of 2014. ASIC has since updated its regulatory guidance on enforceable undertakings (RG 100).  The updated guidance will apply to enforceable undertakings accepted by ASIC from 9 March 2015. The changes made to the guidance centre primarily around the engagement of experts … Continue Reading

Australian government announces tightened rules around foreign investment in Australian agricultural land

On 11 February 2015, the Australian government announced that it would be changing the threshold for notifications of agricultural land purchases by foreign investors from $252 million to $15 million from 1 March 2015. Existing investments included in the threshold The new $15 million threshold is a cumulative threshold – it applies to a foreign … Continue Reading

FSI Consumer Protection Recommendation 26: Insurance disclosure tools and calculators

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

FSI Consumer Protection Recommendation 25: Raising the competency of advisers

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

FSI Consumer Protection Recommendation 24 : Aligning with the interests of consumers

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

FSI Consumer Protection Recommendation 22: Product intervention powers

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

FSI Consumer Protection Recommendation 21: A targeted and principles-based product design and distribution obligation

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

Product governance and a proactive, interventionist regulator: the consumer protection recommendations of the Financial Systems Inquiry

The release of the final report of the Financial Systems Inquiry (FSI) brings us a step closer to a significant shift in conduct regulation in Australia.  As we have previously reported, Australia seems set to join a UK and European trend away from regulation driven by disclosure  towards an approach where product providers bear the responsibility … Continue Reading

The Murray Inquiry – Technology and cybersecurity

As with the Murray Inquiry’s Interim Report, the Final Report highlights cyber security and technology related fraud risks as an emerging trend for the financial services industry that presents many challenges. At the forefront of the risks that arise is the rapid pace of technological change that is occurring within the financial system and how … Continue Reading

The Murray Inquiry – Start-ups and crowdfunding

The Murray Report  describes certain tax distortions in relation to start-ups and notes the need for better targeted tax settings to facilitate innovation, acknowledgement of the barrier to fundraising caused by existing tax uncertainty around venture capital limited partnerships and recognition of the benefits of more flexible access to R&D tax offsets. The Report cites … Continue Reading

The Murray Inquiry – Corporate Administration and Bankruptcy

The Murray Report  accepts that “Australia’s external administration provisions are generally working well and do not require wholesale revision”. ASIC is to retain its supervision of corporate insolvency with recommendations that it be better resourced and “should devote more attention to industry supervision including more proactively identifying and weeding-out misconduct”. This approach is consistent with … Continue Reading

The Murray Inquiry – Innovation, Technology and Regulators

The Murray Inquiry’s Final Report strongly endorsed facilitating innovation in the financial services industry and technology neutral approach to regulation of financial services providers. The Report recommends the establishment of a permanent public–private sector collaborative committee, the ‘Innovation Collaboration’, to facilitate financial system innovation. This is similar to the ‘Innovation Hub’ initiative by the UK’s … Continue Reading

The Murray Inquiry – Superannuation

The Murray Inquiry’s Final Report was a mixed bag for the super industry, with some recommendations going some way toward addressing the needs of industry and consumers but with many of the hard decisions left for another day and another review. Improving efficiency The Inquiry clearly has reservations about the effectiveness of the Stronger Super … Continue Reading

The Murray Inquiry – International competitiveness and the funds management sector

The Murray Inquiry’s Final Report brings good news for the funds management sector and its desire to compete internationally.  This is described as a priority area of reform and Government action as it is a key component of getting the blueprint right for the Australian financial system into the future. The Inquiry’s rationale for supporting … Continue Reading

The Murray Inquiry – Primary themes

The Murray Inquiry asserts that Australia’s financial system has performed well since the Wallis Inquiry and has many strong characteristics.  But it also has a number of weaknesses: taxation and regulatory settings distort the flow of funding to the real economy; it remains susceptible to financial shocks; superannuation is not delivering retirement incomes efficiently; unfair consumer … Continue Reading

The Final Report of the Murray Inquiry

On Sunday 7 December 2014 the Federal Treasurer, Mr Joe Hockey, released the Final Report of the Financial System Inquiry (or ‘Murray Inquiry’ after its Chair, David Murray) having received it at the end of November in accordance with the Terms of Reference.   The Inquiry was established by the Treasurer in December 2013 to review … Continue Reading
LexBlog