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Financial Services Thinking – Issue 3

This edition of Financial Services Thinking wraps-up the latest news for the financial services sector to help you navigate the real issues and important developments.

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  • The deadline for listed and unlisted companies to lodge financial reports under the Corporations Act has been extended by one month for certain balancing dates. ASIC states the extension was granted in response to additional time likely required to prepare such reports due to the COVID-19 pandemic and remote working arrangements. For more information please click here.
  • ASIC has deferred the commencement of mortgage broker best interest duty and remuneration reforms and the design and distribution obligations (DDOs) due to the pandemic. The mortgage broker reforms will commence on 1 January 2021 and the design and distribution obligations will commence 5 October 2021. The deferral is intended to allow industry participants to focus on their response to the pandemic. For more information, click here.  For an article by partner Sean McMahon which provides practical takeaways on how ASIC proposes to administer the new DDOs please click here. For background information about the mortgage broker reforms click here for an article by partner Langton Clarke.
  • ASIC has issued a warning to consumers that investment advertising is not always true to label. The warning centres around the promotion of fixed-term investment products as replacements for bank term deposits. In the past two months, ASIC has issued letters to several investment product issuers advising them to remove certain words from their advertising which created a comparison between their product and term deposits. For more information, click here.
  • Market research conducted by ASIC has revealed that since the outbreak of COVID-19 retail investor activity has substantially increased in relation to securities with significant exposure to risk. It is believed retail investors are beginning to deal in inherently riskier products to take advantage of substantial asset price dislocation caused by COVID-19. ASIC has issued a warning to retail investors advising them to use caution as there is significant danger in unsophisticated investors entering the market at such a turbulent time. For more information, click here.
  • ASIC has released an update on enforcements for the July 2019 to December 2019 period. During the enforcement period, ASIC has commenced 60 new investigations, issued $70,000 in fines, and banned 48 individuals from providing financial services or credit. For the full report, click here.


APRA has released data on the COVID-19 temporary early release of superannuation scheme, an initiative intended to dampen the impacts of COVID-19 related economic distress experienced by Australian households. The data shows:

  • 665,310 applications for early release of superannuation have been made
  • 162,879 applications have been paid
  • the average benefit paid to members is $8,002
  • $1.3 billion in total has been released to members.

Legislation and cases

  • Pershing Securities Australia Pty Ltd (Pershing) has pleaded guilty to the criminal offence of mishandling client money. An ASIC investigation found Pershing received client money in connection with financial services but failed to pay the money into an account that satisfied the requirements of the Corporations Act. Each offence carries a maximum penalty of approximately $45,000. In addition, Pershing has accepted additional conditions imposed on its AFSL. For more information click here.
  • The Federal Court has made interim orders restraining Mayfair Wealth Partners Pty Ltd (Mayfair Platinum) and Online Investments Pty Ltd (Mayfair 101) from promoting their debenture products and prohibiting the use of specific words and phrases in their advertising such as 'term deposit' and 'certainty'. Last month, ASIC commenced proceedings against Mayfair Platinum and Mayfair 101 alleging their advertising was misleading or deceptive as it promotes debenture products as alternatives to bank term deposits. For more information click here.
  • The Federal Court upheld a product intervention order made by ASIC by way of legislative instrument in relation to a short-term credit (Short-Term Credit Order) following a judicial review application by Cigno Pty Ltd (Cigno) challenging the intervention order.  The Short-Term Credit Order was the first and only use of ASIC's new product intervention power, and related to a short-term credit provider charging fees to borrowers via a collateral arrangement with an associated party.  The decision confirms the extent of ASIC's power reaches beyond product design to include product distribution and related conduct.  Cigno has filed an appeal with the Federal Court of Australia.


Emma Donaghue

Emma Donaghue


Contact McMahon Clarke

T +61 7 3239 2900
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