This edition of Financial Services Thinking highlights the latest news from the corporate regulators plus important industry developments, including a timely reminder about continuous disclosure obligations; findings from consumer research about the general advice warning; a new requirement for some providers of debt management services to hold a credit licence; and a warning that responsible entities and management must not only implement a compliance plan, but also foster a corporate culture of compliance.
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ASIC has provided a timely reminder that listed entities are required to immediately disclose material information in certain circumstances pursuant to the Corporations Act and Listing Rules.
Regional Express Holdings (REX) was issued with an infringement notice and $66,000 fine after ASIC found REX had breached its continuous disclosure obligations.
REX attended an interview with the Australian Financial Review (AFR). Prior to the interview, REX considered what could be discussed about its proposal to expand into domestic operations. Following the interview, the AFR released an article which alerted the ASX to REX's proposed domestic operations.
REX was placed in a trading halt and soon after disclosed to the ASX it was considering the feasibility of commencing domestic operations.
A listed disclosing entity must, unless an exception applies, immediately notify the ASX of information that:
Information that loses confidentiality (such as when it is released to the public in a news article) must be immediately disclosed to ASX.
If you need to understand more about your continuous disclosure obligations our Funds Management lawyers can help.
Findings from consumer research indicate changing the 'general advice' label alone is unlikely to prevent confusion about the nature of general advice. The findings concluded:
Following on from the recent Westpac v ASIC High Court decision, it is clear simply providing a general advice warning once at the beginning of a conversation may not be enough for the recipient to understand they are receiving general advice.
Licensees should revisit ASIC's Regulatory Guide 244 Giving information, general advice and scaled advice and ensure they understand what type of advice they are giving in the circumstances. You can contact a member of our Funds Management team for further guidance, and read our latest article here.
Under the National Consumer Credit Protection Amendment (Debt Management Services) Regulations, certain debt management services are considered a 'credit activity' for the purposes of the National Consumer Credit Protection Act.
From 1 July 2021, some providers of debt management services must hold a credit licence authorising them to provide debt management services. Those in the business of offering debt management services should be mindful of this deadline. Contact our Funds Management lawyers who can help with your credit licensing queries.
ASIC has released a warning to consumers about the increase in illegitimate advertisements and websites promoting crypto-assets and contracts for difference trading. These fake articles appear realistic and are misleadingly using ASIC logos or stating the investment is 'approved' by ASIC. Scammers are sharing links via social media and promising an investment with unrealistically high returns.
ASIC has released a warning to Australians about cold callers or unsolicited emails from alleged 'financial advisers' recommending people transfer their super to a new self-managed super fund. Super balances are then transferred to bank accounts controlled by scammers.
Treasury is currently seeking consultation on the proposed financial institutions supervisory levies for 2021-2022. There is a 17.8 percent increase from the 2020-2021 budget which is largely attributable to the additional funding to APRA to boost its capacity to respond to risks within the financial system. Submissions close on 14 June 2021.
Treasury is seeking consultation on the proposed changes for superannuation trustees, including removing the requirement to obtain an actuarial certificate when calculating exempt current pension income where all members of the fund are fully in retirement phase for all of the income year.
Submissions close on 18 June 2021.
ASX released a response to its consultation paper on proposed amendments to the ASX Clear Operating Rules and Procedures and ASX Clear Operating Rules Guidance Note 12 Trust and Client Segregated Accounts. Following the feedback received, ASX intends to remove the proposed changes to the nominated time and audit requirement.
A recent case highlights that responsible entities (REs) and management must ensure they not only satisfy their statutory obligations to implement a compliance plan, but also foster a corporate culture of compliance and execute compliance programs and corrective measures in the event a contravention occurs.
In ASIC v Theta Asset Management Limited, the Federal Court said the first defendant, the RE of a registered scheme, contravened the Corporations Act by:
The Court said the second defendant, the managing director of the RE, contravened the Corporations Act by:
When assessing a pecuniary penalty, the Court considered the following factors: