The Standard

The Standard is a bi-monthly publication to snapshot financial services regulatory issues and the opportunity to contribute to policy development and submissions.

Regulation Watch: Selected consultations, recent FINSIA submissions, and key commentaries as at 24 October

by Caroline Falshaw | 24 Oct 2017

Shifting the Dial — The Productivity Commission’s 5-year review has landed

Tabled yesterday, the inaugural Productivity Commission review looks at what reforms can be implemented in the medium term to boost productivity.

Of interest to FINSIA members are the recommendations on future skills and work and improving the efficiency of markets

It’s laudable, and hopefully governments across the country pay attention. As the Commission observes: “We were told by countless participants that governments themselves — their structures, relationships, incentives and capabilities — are today the key impediment to (but could be the crucial catalyst for) essential reform. We propose that the choice is made in favour of being the catalyst.”

Enhanced regulatory sandbox

The Commonwealth Government is looking to expand ASIC’s regulatory sandbox for fintechs. The exposure draft enables an exemption from obtaining an Australian Financial Services Licence and/or an Australian Credit Licence under certain conditions for the purposes of testing financial and credit services and products.

The consultation closes on 1 December. Consult the Treasury website for further detail. 

ASIC Enforcement Review Taskforce consults on strengthening penalties

Minister for Revenue and Financial Services, Kelly O’Dwyer, has announced the final instalment of the ASIC Enforcement Review.

The taskforce calls for heightened penalties for misconduct, and new powers for ASIC to disgorge profits earned because of contravening conduct.

The consultation closes on 24 November. Consult the Treasury website for further detail. 

FINSIA members that wish to contribute to a submission from FINSIA about the proposals to strengthen penalties are invited to contact Caroline Falshaw A Fin, Head of Industry Affairs and Policy by email [email protected]

BEAR legislation referred to Senate Economics Legislation Committee

The Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Bill 2017 has been referred to the Senate Economics Legislation Committee to report by 24 November.

There are some small concessions from the original exposure draft, but the 1 July 2018 enactment deadline remains.

Submissions to the committee can be made online, and are due by 1 November.

The FMA and ASIC confirm trans-Tasman collaborative approach to fintech

Senior executives from both regulators reaffirmed their cooperation to assist innovative businesses hoping to make ventures into each other’s markets by providing referrals for advice and support.

Full announcement here

While the ACCC puts the banks on notice about competition

The AFR reports that ACCC Chair Rod Sims is counting down to July 2018 when the regulator can look at competition issues of its choosing. Sims told the Citi annual investment conference: "The big issue in banking is that you have four big players and their market share has done nothing but increase over the past 20 years or so … There are some quite big players other than the big four but they are not really gaining any traction. Now why is that?"

Removing restrictions on robo-advice

The Financial Markets Authority will grant exemptions to allow personalised robo-advice in the New Zealand market commencing in 2018.

A further consultation is expected in November to clarify the details of the application process.

For more, visit the FMA website

From ‘financial literacy’ to ‘financial capability’

ASIC has opened a consultation to update its National Financial Literacy Strategy. The proposed strategy aims to have a stronger focus on interventions that support behavioural change.

Adopting approaches in the UK and NZ, ASIC proposes to shift the language in the strategy from ‘financial literacy’ to ‘financial capability’. Improving capability will focus on initiatives in three areas:

  1. Managing money day-to-day
  2. Planning for the future
  3. Making informed decisions

Comments close on 17 November, and can be made by participating in ASIC’s online survey.

FINSIA members that wish to contribute to a submission from FINSIA about the strategy are invited to contact Caroline Falshaw A Fin, Head of Industry Affairs and Policy by email [email protected]

Phased licensing for ADIs

APRA has released a discussion paper that proposes a phased approach for the licensing of ADIs (see our comments above on competition). Under the proposals, new entrants could apply for a restricted licence and begin limited operations while they work on the capabilities necessary to operate under the full prudential framework.

APRA phased licensing

Submissions close on 30 November 2017. To provide a submission please contact [email protected].

Extending the UK Senior Manager Regime

It is proposed that the UK Senior Manager Regime (SMR) be extended to all financial services firms regulated by the Financial Conduct Authority. Australia’s proposed Banking Executive Accountability Regime (BEAR) is modelled on the SMR, so developments will be of interest to FINSIA members.

The current issue of JASSA contains a survey of the UK SMR, and accountability regimes in the US, Hong Kong, and Singapore, and their impact on industry culture. The paper is authored by Angela Pearsall, Liam Hennessy and Jessica Taylor from Clifford Chance. 

Comments close on 3 November, and further detail about the consultation is available at the FCA website.


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