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APRA has published the Banking, Insurance, Life Insurance and Health Insurance (prudential standard) determination No. 2 of 2019 which determines Prudential Standard CPS 510 Governance from 1 July 2019. CPS 510 Governance sets out minimum foundations for good governance of an APRA-regulated institution in the deposit-taking, general insurance, life insurance and private health insurance industries, and of a Head of a group. Its objective is to ensure that an institution and group is managed soundly and…
Being fair to customers is a positive legal obligation of Australian Financial Services Licensees and Credit Licensees (together with being efficient and honest) with significant penalties for a breach. But fairness is not defined; the Banking Code has standards and examples of fairness. According to ASIC Chair James Shipton: “Fairness means doing what’s right; it’s the quality of being reasonable and just… From a legal perspective, existing case law suggests fairness is the ethical performance…
ASIC has used its update on enforcement outcomes during the period 1 July 2018 to 31 December 2018 to highlight recent changes in its enforcement approach and its priorities. Why not litigate?ASIC has adopted a ‘why not litigate?’ enforcement stance and begun the process of establishing an Office of Enforcement.ASIC Commissioner Sean Hughes has explained the policy: “In 2019, ASIC will have a greater focus on court-based outcomes to provide strong public denunciation and punishment…
The Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC) and the Life Code Compliance Committee have all recently released reports on the life insurance sector. The Life Code Compliance Committee, which oversees the Life Insurance Code of Practice, has published the Life Code Compliance Committee’s Annual Industry Data and Compliance Report for the period 1 July 2017 to 30 June 2018. Most complaints were about issues related to the consumer’s policy…
Over the years I have published a series of case notes on proceedings issued by ASIC for breach of directors’ duties. Here are links to the case notes that are regularly referred to by searchers: Centro (ASIC v Healey): directors’ duties for financial statements; Prime Trust (ASIC v Lewski and others): the importance of minutes; One.Tel (ASIC v Rich): ASIC lost case; ASIC v Mariner: business judgment rule…
The Treasury Laws Amendment (AFCA Cooperation) Regulations 2019 has been registered to require all Australian Financial Complaints Authority (AFCA) members including Australian Financial Services Licence holders, Australian Credit Licence holders, and Registrable Superannuation Entities to co-operate with AFCA in resolving complaints under the AFCA scheme to which they are a party before, on or after 6 April 2019. Regulation 7.6.03C has been inserted into the Corporations Regulations requiring Australian Financial Services Licence holders to take…
The Australian Prudential Regulation Authority (APRA) has published its new Enforcement Approach which sets out how APRA will approach the use of its enforcement powers to prevent and address serious prudential risks and to hold entities and individuals to account. The new Enforcement Approach is based on the results of its Enforcement Review which recommended:• APRA adopting a “constructively tough” appetite to enforcement and setting it out in a board-endorsed enforcement strategy document;• ensuring APRA supervisors are…
I have added a new video on the 2019 version of the Banking Code of Practice to my website. At 25 minutes long it provides an overview of the new Code and the issues raised by the Financial Services Royal Commission. The Banking Code of Practice is due to commence on 1 July 2019 for all members of the Australian Banking Association. You can watch it here.…
The Australian Banking Association (ABA) has issued a consultation paper on a new industry guideline on supporting vulnerable customers, to complement the new Banking Code of Practice. Background. The ABA says it is working with ASIC and the ACCC to amend the Banking Code to incorporate the Financial Services Royal Commission recommendations for changes to Chapter 14 of the Code about vulnerable customers. The paper discusses defining “vulnerable customers”. It notes that any definition…
In a recent speech APRA Chair Watne Byres made the following comments about executive remuneration and the Banking Executive Accountability Regime (BEAR): “In the context of executive remuneration, I think there are a few aspects where the direction is pretty clear. The first is metrics. The current system of executive remuneration based largely on the achievement of financial targets, including long-term incentives based primarily if not entirely on relative TSR [Total Shareholder Return], will have…