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A summary of cases by our Corporate Advisory team for the month of May.
Welcome to the latest update from Gilbert + Tobin's Corporate Advisory team. The update provides a summary of key recent legal developments, particularly relevant to in-house counsel.
In this issue, you will find:
From 22 February 2018, for the first time in Australia, entities subject to the Privacy Act 1988 (Cth) now have a mandatory obligation to report what are called ‘eligible data breaches’ to both the Office of the Australian Information Commissioner and any individuals who may be potentially affected by a data breach.
The BEAR reforms – Banks and their senior executives to be held to account
The Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Act 2018 (BEAR Act) (which received Royal Assent on 20 February 2018) is intended to incentivise good behaviour and ensure that banks and individuals are held to account where they fail to meet the standards expected of them.
In summary, under the BEAR Act, authorised deposit-taking institutions (ADIs) (and their subsidiaries) are required to:
The accountability obligations of an ADI and its accountable persons include:
Under the Act, taking of reasonable steps includes having:
ADIs are also prohibited from:
in both cases with a carve out for liability for legal costs. ADIs should consider whether their existing D&O policies or deeds of indemnities should be amended to avoid a potential breach of the BEAR obligations.
APRA will also have additional examination and enforcement powers to enhance its ability to enforce the BEAR Act. If an ADI breaches its BEAR obligations, significant civil penalties may be imposed by a court and if an accountable person breaches its BEAR obligations, that person may face disqualification or financial consequences through the reduction of variable remuneration.
The BEAR Act commences:
The Treasurer has indicated that the Government will consult shortly on a legislative instrument defining small, medium and large ADIs for the purpose of the BEAR.
See also Treasurer, Hon Scott Morrison’s media release dated 7 February 2018.
Strengthening APRA’s crisis resolution powers
On 14 February 2018, the Senate passed the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2017 (Bill) which gives the Australian Prudential Regulation Authority (APRA) additional powers for crisis resolution and resolution planning in relation to regulated entities. The Bill is currently awaiting Royal Assent.
The Bill provides
See also Treasurer Hon Scott Morrison’s media release dated 14 February 2018.
Cracking down on credit card practices and boosting competition in banking
On 15 February 2018, the Senate passed the Treasury Laws Amendment (Banking Measures No.1) Bill 2018 (Bill) which forces credit card providers to scrap unfair and predatory practices. The Bill is also currently awaiting Royal Assent.
Key features of the Bill include:
The Bill will also:
See also Treasurer Hon Scott Morrison’s media release dated 15 February 2017.
On 9 February 2018, Treasury released the Review into Open Banking. Open Banking is the application of the comprehensive “Consumer Data Right” recommended by the Productivity Commission in its 2017 report on Data Availability and Use to the banking industry. A recent G+T Insight examines the proposed regulatory framework and recommendations in the Report.
Submissions on the Report are due by 23 March 2018.
Australia’s Multinational Anti Avoidance Law (MAAL) (which came into effect on 1 January 2016) prevents multinationals from escaping Australian tax by using artificial or contrived arrangements to avoid having a taxable presence in Australia.
Treasury has now released exposure draft legislation which seeks to strengthen the MAAL by preventing large multinationals from using foreign trusts and partnerships in corporate structures to avoid its application.
Submissions on the exposure draft legislation closed on 23 February 2018.
Following the release of the Final Report of the 2017 Australian Consumer Law Review on proposed legislative reforms to the Australian Consumer Law, Treasury has recently sought submissions on the exposure draft Treasury Laws Amendment (Australian Consumer Law Review) Bill 2018 and the associated regulations and explanatory materials. For details see here (submissions are due on 28 February 2018).
In summary, the Exposure Drafts include amendments to the Australian Consumer Law (ACL) to:
The Government also introduced the Treasury Laws Amendment (2018 Measures No. 3) Bill 2018 (Cth) to Parliament on 15 February 2018. The Bill, if passed, will increase the penalties in the Competition and Consumer Act 2010 (Cth) for breach of the ACL to align the maximum penalties for breach of the ACL with the maximum penalties for breach of the competition provisions of the CCA.
This will mean that the maximum penalty for a body corporate in breach of the ACL will increase significantly from $1.1 million to the greater of:
Maximum penalties may be imposed where a person engages in conduct including unconscionable conduct, making false or misleading representations, and supplying consumer goods or certain services that do not comply with safety standards.
The amendments will commence from the later of 1 July 2018 and the day after the Bill receive
d Royal Assent (and will apply to acts, omissions or offences that occur on or after the commencement date).