In this edition of Financial Services Thinking, we wrap-up the latest news for the financial services sector and share a hot tip reminding trustees not to exceed their powers when granting a lease over trust property.

We encourage you to contact our team who can provide tailored solutions so that you are best placed to future proof your business.

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ASIC

Internal dispute resolution procedures

On 30 July 2020, ASIC released updated requirements for financial services firms dealing with complaints from consumers and small businesses through their internal dispute resolution (IDR) procedures. Regulatory Guide 271: Internal dispute resolution (RG 271) sets out the updated requirements developed by ASIC following an extensive research process involving consultation with Australia's big four banks. ASIC intends RG 271 to provide fair and timely outcomes for complainants by focusing on:

• Reducing the time financial service firms have to respond to a complaint.
• Setting out the information a firm must include in a written response to a complainant to allow a complainant to escalate the matter if they are not satisfied with the outcome.
• Setting a new timeframe for appeal against IDR decisions.
• Providing guidance to financial service firms on how to handle representatives who are not acting in the best interests of consumers.

Minor updates to RG 97

ASIC has released a minor change to Regulatory Guide 97 (RG 97) which deals with the disclosure of fees and expenses in PDSs and periodic statements from retail fund managers and responsible entities (REs). These latest changes, which follow the major amendments discussed in the July issue of Financial Services Thinking, provide minor technical refinement in relation to—

• disclosure of buy/sell spreads in periodic statements for collective investment products
• disclosure of performance fees
• identification and treatment of derivative costs
• significant event notice requirements.

The amendments also clarify some definitions for consistency with the related legislative instrument. For background information visit our Hot Topics for Fund Managers.

Regular and reasonable valuations of fund assets

ASIC has published an article reminding REs of their obligations to ensure the valuations of their managed fund assets are regular and reasonable. While acknowledging that the valuation of illiquid assets is more difficult due to COVID-19, ASIC emphasised that REs should also ensure they provide their members and investors with timely, full, and fair disclosure of asset values. ASIC also said REs should inform their members about the processes they are implementing to support the valuations given the current circumstances and uncertainties.

Please click here for a recent article by Sean McMahon and Elliott Stumm. If you need help with understanding your obligations and the issues around the valuation of scheme assets, our Funds Management team can help.

Treasury

Public consultation on Foreign Investment Reform Bill

The Australian Government is seeking stakeholder views on the exposure draft of the Foreign Investment Reform (Protecting Australia's National Security) Bill (Bill). The Bill is intended to give effect to the major reforms of the Foreign Investment Review Framework which we discussed in the June edition of Financial Services Thinking. Following public consultation, which closes on 31 August 2020, the Bill is expected to be introduced during the Spring sitting of Parliament.

For background information, click here for an article by partner Mark Lyons which highlights the significant expansion of transactions now requiring FIRB approval. Our lawyers understand the changes and can assist with your questions and explain how to develop the best strategy.

AUSTRAC

Draft AML/CTF Rules

Public submissions on AUSTRAC's proposed amendment to Chapter 46 of the Anti-Money Laundering and Counter-Terrorism Rules closed on 12 August 2020. The proposed amendments aim to provide simpler and less prescriptive rules regarding special circumstances for the applicable customer identification procedure.

Cases and legislation

Consumer monetary threshold increased

The monetary threshold to be considered a 'consumer' has increased from $40,000 to $100,000 to take account of the increased cost of living and inflation since the threshold was introduced in 1986.  The Treasury Laws Amendment (Acquisition as Consumers­—Financial Thresholds) Regulation 2020 amends both the Australian Consumer Law and Australian Securities and Investments Commission Act.

In the news

APRA initiatives and issue of new licences recommence

APRA has announced the recommencement of most of its planned policy and supervisory initiatives as well as the issuing of new banking, insurance and superannuation licences. The issuing of new licences was halted in April due to COVID-19 disruptions while policy and supervisory initiatives were put on hold in March. For more information click here.

Hot tip!

Trustees beware when granting a lease over trust property

Trustees of trusts established in Queensland need to ensure they are acting within their power when granting a lease over trust property.  There is a little known provision of the Trusts Act that requires a trust deed to provide a specific power to grant leases where the term of the lease exceeds 30 years (including any options granted) for a building lease or 21 years (including any options granted) for any other lease. Our Funds Management lawyers can help with your queries and explain the impact.