By Mark Bland, Partner and Geoffrey McCarthy, Special Counsel

This update is designed to help financial services firms track and manage regulatory change. We look ahead to forthcoming developments, look back at recent changes and then spotlight the impact of a key development on trustees.

We have collaborated with Argos Reg-Tech to create Argos, an online platform where subscribers can find detailed analysis of regulatory reforms, updated on a daily basis. Contact us if you would like to learn how Argos can help your firm manage the risks of regulatory change.

Key developments

Consultation has opened on proposals for legislating significant changes to financial reporting and auditing requirements for RSEs.  This includes half yearly reports and additional requirements for financial records.  Directors will potentially open for significant civil penalties that can’t be indemnified from the Fund.

Key consultations are closing concerning the Financial Accountability Regime and ASIC’s Hawking guidance are closing. Other consultations are specifically relevant where trustee provide advice.

Last week

13 August – ATO published  Guidance on re-contribution of COVID-19 early release amounts pursuant to the Treasury Laws Amendment (More Flexible Superannuation) Act 2020 which allows a person to re-contribute COVID-19 early release amounts without counting towards their non-concessional cap.

13 August –  ATO published Guidance on Member account reporting and validation.

13 August – A public hearing for the PJC inquiry regarding regulation of the use of financial services such as credit cards and digital wallets for online gambling in Australia was held.

13 August – The Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 dealing with continuous disclosure and facilitation of electronic execution and company meetings was enacted. This continues COVID-19 measures for AGMs and also continues the continue disclosure relief, requiring a plaintiff to prove an entity “knows, or is reckless or negligent with respect to whether, the information would, if it were generally available, have a material effect on the price or value” of the entity’s securities.

13 August – Feedback for CRIS 2020-21 closes. The Cost Recovery Implementation Statement (CRIS) provides information on how ASIC will implement the industry funding model and recover the costs of our regulatory activities from each industry subsector in 2020–21.

13 August – Consultation for the Financial Accountability Regime draft bill closes. The FAR regime is designed to extend the current Bank Executive Accountability Regime (BEAR) and is anticipated to apply to RSE licensees from 1 July 2023.

13 August – Consultation for draft legislation for the Compensation Scheme of Last Resort closes. The establishment of the CSLR will facilitate payments of limited compensation to eligible consumers who have received a determination in their favour from AFCA which remains unpaid.

13 August – ASIC, APRA, RBA and EFIC appear before Joint Standing Committee on Trade and Investment Growth in relation to ‘Prudential regulation of investment in Australia’s export industries’. ASIC and APRA faced queries as to the impact their policies on managing climate risk were causing the withdrawal of capital from carbon intensive industries.

12 August – ASIC publishes 21-213MR ASIC’s approach to new laws reforming financial services sector, indicating it will take into account the context firms are operating in and whether firms are acting in good faith. This approach will apply to design and distribution obligations, hawking, a deferred sales model for add-on insurance products, reference checking and information sharing requirements for financial advisers and brokers, and new requirements around how breaches are reported to ASIC and disputes are managed internally in firms.

12 August – ATO releases fact sheet regarding super contribution and compensation receipts.

12 August – Consultation was open on- draft Treasury Laws Amendment (Financial Reporting and Auditing Requirements for Registrable Superannuation Entities) Bill 2021 which will enhance the  financial reporting and auditing obligations in relation to registrable superannuation entities and give ASIC greater oversight.

11 August – Treasury Laws Amendment (2021 Measures No. 6) Bill 2021 introduced to the House of Representatives, which will, importantly, create greater transparency on each partner’s superannuation benefits in parties to family law proceedings.

10 August – Financial Services Reform (Hayne Royal Commission Response-Better Advice) Bill 2021 was debated in parliament and is likely to return for further debate in the Senate in the week commencing 23 August. The Bill envisages the closure of FASEA on 31 December 2021 after which ASIC’s Financial Services and Credit Panel to take administrative action against a financial adviser and issue warnings, directions to undertaking training or suspend or cancel their registration. It will also streamline regulation by removing the requirement to be registered with the TPB for tax (financial) advice services.

10 August – APRA publishes additional FAQs on the Superannuation Data Transformation Phase 1 reporting standards.

10 August – Treasury Laws Amendment (2021 Measures No. 1) Bill 2021 addressing electronic company meetings and document execution passed by Parliament with Government amendments.

9 August – Treasury releases proposed changes to Design and Distribution Obligations relating to term deposits, retail/wholesale client definitions and non-cash payment facilities.

Next week

16 August – Draft instruments SPR 2021/D1 and D2 in relation to stapled funds and additional choice super fund requirements – comments due.

17 August – Public consultation for ASIC’s Consultation Paper 346 on Hawking closes.

20 August – Submissions for ‘Single Disciplinary Body, registration and civil penalties for financial advisers Policy Paper’ closes.