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The Department of Home Affairs has issued its draft guidance “Modern Slavery Act 2018: Draft Guidance for Reporting Entities” (Draft Guidance) for the new Modern Slavery Act 2018 (Cth) (the Act).
The ASIC Enforcement Review Taskforce is currently reviewing the enforcement regime of the Australian Securities and Investments Commission (ASIC). Assessing the existing regulatory tools that assist ASIC perform its functions, the Taskforce has released three consultation papers:
The consultation papers are discussed below. Submissions close 26 July 2017 for all three consultations. Please be in touch should you wish to discuss.
ASIC grants Australian financial services (AFS) and Australian credit licences if the applicant and application meet requirements specified in the Corporations Act 2001 (Corporations Act) and National Consumer Credit Protection Act 2009 (Credit Act). However, there are different assessment powers and thresholds for assessment of AFS licence applications and credit licence applications. The Taskforce considers that, to the extent practicable, there should be uniformity between the licensing regimes for AFS and credit licences.
The Taskforce has drawn on the recommendations of the final report of the Financial System Inquiry and made the following proposals in this consultation paper to strengthen ASIC’s licensing powers:
In relation to key services provided to retail and small business customers, the Taskforce is consulting on the introduction of a co-regulatory model for codes to significantly improve their content, consistency and enforceability. Under this model, industry participants would be required to subscribe to an ASIC approved code under the watch of a code monitoring body comprised of industry, consumer and expert members. In the event of non-compliance, individual customers would be able to seek appropriate redress through internal and external dispute resolution arrangements.
The Taskforce has proposed that the content of and governance arrangements for relevant codes should be subject to approval by ASIC, with entities whose activities are covered by an approved code required to subscribe to that code by a condition on their financial services license or some similar mechanism. The activities should align with the proposed jurisdiction of the new Australian Financial Complaints Authority (AFCA) (the establishment of which we previously discussed). To this end, each code should be expressed to apply to dealings between a subscriber and anyone who is entitled to access the dispute resolution system operated by the AFCA in respect of those dealings.
The paper identifies a range of activities proposed to be covered by the approved code requirement, including (though not exhaustive): retail banking, retail life insurance, the provision of insurance and associated services through superannuation or other group arrangements, retail general insurance, insurance brokerage, and the provision of ePayments services. However, the Taskforce has recognised that a co-regulatory model may not be appropriate for all activities conducted in the financial sector. For example, there may be complexity for financial advisers who will soon be subject to a Code of Ethics compliance requirement in 2020, set by the Financial Adviser Standards and Ethics Authority.
ASIC is currently able to utilise search warrant powers under different legislation including the Australian Securities and Investments Commission Act 2001 (ASIC Act), National Consumer Credit Protection Act 2009, Superannuation Industry (Supervision) Act 1993, Retirement Savings Accounts Act 1997 and Crimes Act 1914 (Crimes Act). ASIC has argued that issues, such as inconsistences as a result of differences between the powers under different legislation, have limited the utility of search powers as investigative tools.
The Taskforce has proposed possible reforms to strengthen ASIC’s investigative toolkit, broadly suggesting the following:
These positions seek to “harmonise and strengthen” ASIC’s powers, making such powers comparable with the Australian Competition and Consumer Commission.