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Financial Services Thinking – Issue 16

This edition of Financial Services Thinking highlights the latest news from the corporate regulators plus important industry developments. We also share a ‘hot tip’ about the countdown to ASIC’s new breach reporting regime.

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New internal dispute resolution standards

Internal Dispute Resolution (IDR) data reporting is required under the Government’s mandatory IDR data reporting framework. ASIC’s recently published IDR data dictionary and glossary will be pilot tested in late 2021. The data dictionary contains the information financial firms will be required to collect and report to ASIC, and the data glossary provides explanations about the key terms within the data dictionary.

Financial firms should (if not already) begin preparations for the new IDR standards which come into effect on 5 October 2021 and consider how to map their complaints system to the data dictionary. Please note, the data dictionary and data glossary are in pilot form so may change before final versions are published.

Contact our Funds Management lawyers for more information about these changes and for assistance with your preparations.

Reference checking and information sharing protocol

From 1 October 2021 AFS licensees and credit licensees that—

  • employ or authorise representatives to act on their behalf as advisers or mortgage brokers, and/or
  • whose employees or representatives take on financial advice or mortgage broking roles with other licensees

must comply with the ASIC reference checking and information sharing protocol (Protocol). ASIC has also released INFO 257 to provide further guidance in relation to the Protocol.

It is important licensees understand their obligations about providing written references as a referee and undertaking reference checks as a recruiting licensee. If you have any questions, please reach out to our lawyers who can help with your licensing queries.

Relief for litigation funding schemes

ASIC has released Consultation Paper 345 Litigation funding schemes: Guidance and relief seeking feedback from industry participants and stakeholders on the proposed guidance and relief for litigation funding schemes. This follows the recent requirement for operators of litigation funding schemes to hold an AFS licence and be subject to the MIS regime under the Corporations Act. Submissions are due by 20 August 2021.

Draft guidance on hawking reforms

ASIC is currently consulting on proposed updates to its guidance on the prohibition on the hawking of financial products. The updates relate to reforms to the anti-hawking regime under the Financial Sector Reform (Hayne Royal Commission Response) Act, which is due to commence on 5 October 2021.

ASIC has indicated its proposal to revise and clarify previous guidance on the types of communications and the nature and scope of consent to which the hawking prohibition applies. Comments and feedback close on 18 August 2021.

Proposed increase to ASIC industry funding levies

ASIC recently released its draft Cost Recovery Implementation Statement (CRIS) for 2020-21 outlining its estimated regulatory costs and industry levies for 2020-21.

Earlier this year we wrote about the 2019-20 levies. Responsible entities (REs) and wholesale trustees are again largely spared, with relatively minor increases to the proposed levy rates. Following significant increases to the 2019-20 levies, ASIC has again targeted the financial advice sector.

For more details and a case study explaining what a 'typical' wholesale property fund manager could expect to be invoiced please click here.

Feedback on the draft CRIS can be submitted until 13 August 2021, with final levies published in December 2021 and invoiced in January 2022.


Compliance update

ASX Compliance Update no. 06/21 includes reminders to listed entities about:

  • New online forms for the notification of certain corporate actions and events, including changes in issued securities and applying for quotation of new or additional securities, with effect from 5 June 2021.
  • Appendix 4C quarterly reporters are required to clearly identify their activity reports in the title and to use the most current version of the cash flow template.


Changes to the SIV regime 

Changes to the Significant Investor Visa (SIV) regime took effect on 1 July 2021. The key changes relate to—

  • the complying investment framework (including investment allocation)
  • an annual audit requirement
  • the use of derivatives
  • clarification on the use of fund of funds
  • the investment period.

Our lawyers can help with your queries, and you can click here for an article explaining the impact of these changes in more detail.

Treasury releases consultation in relation to Foreign Financial Service Providers

On 9 July 2021, Treasury released a consultation paper on proposed measures to reduce duplicate regulation and barriers for Foreign Financial Services Providers (FFSPs) entering the Australian market. The consultation follows the Federal Government’s announcement on the Global Talent Attraction package in the 2021-22 Budget. The Government is specifically seeking to restore previously well-established regulatory relief for FFSPs and options to create a fast-track licensing process for those wishing to establish more permanent operations in Australia. Consultation closed on 31 July 2021.

Cases and legislation

BT Funds Management and Asgard Capital Management ordered to pay $3 million penalty 

The Federal Court recently handed down $3 million in civil penalties against BT Funds Management and Asgard Capital Management for deducting ongoing adviser fees from customers’ accounts when no advice was provided and for making misleading statements, engaging in misleading and deceptive conduct, and breaching their obligation to ensure they provided financial services efficiently, honestly, and fairly in accordance with AFS licensing obligations.

MyBudget applies for AFSL

ASIC recently investigated MyBudget’s operating model following a ransomware incident which left 13,000 clients without access to their account for over a week. MyBudget holds a credit licence and is a member of AFCA, but has never held an AFSL and is not currently authorised to provide financial services. ASIC concluded MyBudget is providing financial services by way of a non-cash payment facility and the company has since applied for a licence.

Over the years we have advised on hundreds of AFSLs. Our experience in funds management and financial services means we can guide you through the application process in the shortest possible timeframe. Contact partner Elliott Stumm for assistance.

Westpac to pay $87 million compensation

Westpac will remediate approximately 32,000 customer accounts for failing to notify customers about corporate actions by their ASX-listed security holders between 2005 and 2019. Corporate actions include buy backs, renounceable and non-renounceable rights issue, share purchase plans, take overs and other investment activities.

Compensating customers affected by misconduct or negligence is an important step for licensees to meet their obligations to act fairly, honestly, and efficiently.

All advice licensees and platform operators are encouraged to consider and review their corporate action management arrangements to ensure the appropriate corporate action notifications are provided to those entitled. ASIC gives a particular reminder to platform operators who have arrangements in place with financial advisers and advice licensees to pass on corporate actions information to customers. Operators should ensure they have the necessary checks and balances in place to ensure their customers are being notified appropriately.

Hot tip!

Countdown to new breach reporting regime 

Licensees should be aware of the new breach reporting provisions which commence on 1 October and how these changes affect your current policies and procedures.

Key points to be aware of include the following:

  • The current 'self-assessment' of significance will remain for some types of breaches, however a broad range of breaches will be 'deemed' to be significant, and a reporting obligation will be automatically triggered.
  • The breach reporting period will be extended to 30 calendar days (compared to 10 business days).
  • ASIC has an obligation to publish details of certain breach reports it has received, including the entities which lodged those reports.

We can assist with a review of your current policies and procedures.


Emma Donaghue

Emma Donaghue


Elliott Stumm

Elliott Stumm


Contact McMahon Clarke

T +61 7 3239 2900
A Level 7, 100 Creek Street, Brisbane Qld 4000