ASIC has announced its focus areas for 31 December 2017 financial reports of listed entities and other entities of public interest with many stakeholders (which are detailed in its media release dated 8 December 2017).
In particular, ASIC has called for focus on giving information for users of financial reports that is useful and meaningful, and to address the impact of major new accounting requirements (which, according to ASIC, will have the greatest impact on financial reporting since the adoption of the International Financial Reporting Standards (IFRS) in 2005).
ASIC has also announced the results from its review of the 30 June 2017 financial reports and has reported that the largest number of its findings continue to relate to impairment of non-financial assets and inappropriate accounting treatments. ASIC has advised that directors and auditors should continue to focus on values of assets and accounting policy choices in preparing their 31 December 2017 financial reports.’
ASIC reports on relief applications
ASIC’s Report 556 Overview of decisions on relief applications (April to September 2017) outlines its decisions on relief applications during that period.
- reports that ASIC granted relief from provisions of the Corporations Act 2001 (Cth) (Corporations Act) or the National Consumer Protection Credit Act 2009 (Cth) (National Credit Act) in relation to 440 applications, which were assessed as facilitating business or cutting red tape without harming stakeholders;
- discusses various publications and guidance released by ASIC during the 6 months that may be relevant to prospective applicants for relief;
- summarises examples of situations where ASIC has exercised, or refused to exercise, its exemption and modification powers under the Corporations Act and the licensing and responsible lending provisions of the National Credit Act; and
- highlights circumstances where ASIC has considered adopting a no‑action position regarding specified non‑compliance with statutory provisions.
See ASIC media release dated 6 December 2017.
ASIC report on cyber resilience of financial markets firms
ASIC’s Report 555 Cyber resilience of firms in Australia’s financial markets (Report 555) on the cyber resilience of over 100 firms operating across Australia's financial markets is designed to:
- raise awareness of cyber risks;
- highlight existing good practices and areas for improvement; and
- monitor and assess the cyber preparedness of financial markets firms.
Key insights from REP 555 include:
- there is a growing understanding that cyber risk is a strategic, enterprise-wide issue that is on the radars of all organisations and is attracting increasing investment;
- the disparity between large firms and small-and-medium firms reflects their investment in cyber security, the period of time cyber security has been an investment priority, and the ability to acquire highly specialised skills;
- larger firms have demonstrated a relatively high degree of cyber resilience; and
- small-and-medium firms are working towards developing their cyber resilience by investing in cyber security, but there is a long way to go.
See ASIC media release dated 30 November 2017.
Broader employee incentive scheme relief for trustees and financial advisers
ASIC Corporations (Amendment) Instrument 2017/1049 has amended ASIC Class Order [CO 14/1000] to provide certain disclosure, advertising, registration and PDS relief for trustees and financial advisers in relation to certain employee incentive schemes.
To date, ASIC’s general approach to granting individual relief for listed entities which are unable to meet the conditions for the class order relief has been to limit the relief to what is required for the particular transaction. This has meant that:
- the relevant entity must apply for further relief every time it makes significant changes to its scheme or adopts a new scheme; or
- ASIC can provide broad individual relief by creating a legislative instrument under the Legislation Act 2003 (Cth): item 9 of the table in regulation 7 of the Legislation (Exemptions and Other Matters) Regulation 2015 (Cth).
The purpose of Instrument 2017/1049 is therefore to provide relief for trustees and financial advisers who are not necessarily associated with the listed entity and are not specified by name where the relevant employee incentive scheme is covered by individual relief on terms that are similar to CO 14/1000.
ASIC confirms restricted use of independence terminology in financial services
ASIC has updated Regulatory Guide 175 Licensing: Financial product advisers—conduct and disclosure (RG 175) to confirm previously announced restrictions on the use of terminology that implies independence, such as ‘independently owned’, ‘non-aligned’ and ‘non-institutionally owned’ which are restricted under the Corporations Act 2001 (Cth).
Financial services providers can only use these terms if they meet the requirements set out in section 923A of the Act, including that they do not receive commissions, volume-based payments, or other gifts or benefits, and operate without any conflicts of interest.
See ASIC’s media release dated 14 November 2017.
Guidance for new Financial Services and Credit Panel
Eighteen members have now been appointed to the new Financial Services and Credit Panel (FSCP). The role of the FSCP will be to decide whether ASIC makes banning orders against individuals for misconduct in the course of providing retail financial services and/or engaging in credit activities where the matter is appropriate for peer review because of its significance, complexity or novelty.
ASIC has also released Regulatory Guide 263 Financial Services and Credit Panel (RG 263) which sets out the principles and processes of the FSCP, including:
- the types of matters to be referred to sitting panels of the FSCP; and
- the hearing procedures and decisions of the FSCP.
See ASIC’s media releases dated 10 November 2017 and 16 November 2017.