November « 2004 « Australian Regulatory Compliance Review from Langes+ Lawyers

November 9, 2004

Debt collection regulation

The Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) have issued a brochure outlining their roles in regulating debt collection activities.

Both ASIC and the ACCC oversee laws which protect consumers from inappropriate behaviour by a debt collector.

‘Debt collectors must not use physical force, undue harassment or coercion when collecting debts. They must also ensure that their conduct does not mislead or deceive consumers or take unconscionable advantage of them’, ASIC’s Executive Director Consumer Protection and International Relations, Mr Greg Tanzer, said.

The new brochure sets out the role of each agency in debt collection:

ASIC deals with debt collection complaints relating to a financial service. This includes debts on credit card accounts, personal or home loans, finance provided by a finance company for items such as a car or household goods, as well as fees for the provision of financial advice; the ACCC deals with debt collection complaints relating to goods and non-financial services. This includes debts for telephone services or other utilities, and for the services of tradespeople and professionals, where immediate payment is not required.

The above arrangements also apply when a debt is ‘assigned’ or sold to a third party, such as a debt buy-out company.

In addition to ASIC and the ACCC, complaints regarding debt collection can also be lodged with state or territory government consumer affairs or fair trading agencies, or an industry dispute resolution scheme (for example, the Banking and Financial Services Ombudsman, if the debt collector is a member of the scheme).

Print This Post

Posted 9th November 2004 by David Jacobson in Trade Practices

Unconscionable Conduct

ACCC has released an updated guide to unconscionable conduct law.

It deals with issues relating to other businesses as well as consumers.

Print This Post

Posted 9th November 2004 by David Jacobson in Trade Practices

The Basel II Framework

The Australian Prudential Regulation Authority (APRA) has
announced that it will implement the Basel II Framework from year-end 2007.

Authorised deposit-taking institutions (ADIs) will be required to meet the capital requirements of the Framework from 1 January 2008 and their prudential reporting for the quarter ended 31 March 2008
will be based on the requirements of the Framework.

The Basel II Framework, developed by the Basel Committee on Banking Supervision (Basel Committee) is a new global supervisory framework for assessing the minimum capital adequacy of deposit-taking institutions.
It contains guiding principles for ADI’s to assess their capital adequacy and to adjust them to reflect any other risks not taken into account originally.

ADI’s will be required to publicly disclose information on their capital, risk exposures and risk assessment.

Implementation will require upgrading of ADI internal systems for measuring risks and managing default data.
It will also require a decision on which credit risk approach to adopt. Different approaches will result in different capital adequacy requirements (ie low risk lending will have a lower capital requirement).

The new framework will also affect the securitisation industry.

Print This Post

Posted 9th November 2004 by David Jacobson in Financial Services

Financial planning rebates and commissions

The Financial Planning Association of Australia (FPA) and the Investment and Financial Services Association (IFSA) have jointly released a finance industry guide on rebates and related payments. The Guide sets out standard definitions and summarises all of the rebate practices and disclosure requirements at different stages of the advisory and sales process. The guide takes effect from 1 January 2005 and compliance by FPA members will be proactively enforced after 1 July 2005. Alleged breaches by FPA members will be investigated and handled under the FPA’s disciplinary scheme.

The key principles underlying the Guide are:

Consumers should know what discounts they are receiving when paying for advice and/or investments, and which service they relate to. The Guide specifies that only discounts that are passed through to the consumer should be called "rebates".

Consumers need to be made aware of the revenue received by their adviser and the licensee when the adviser recommends a platform or product. The Guide says that any payment received from a platform or fund manager which is not passed straight through to the consumer should be disclosed as "commissions".

The FPA says similar provisions apply to fees paid by a fund manager to a platform/licensee and fees paid by the platform provider to a licensee.

Print This Post

Posted 9th November 2004 by David Jacobson in Financial Services

November 7, 2004

New Edition of IFSA Blue Book

Investment & Financial Services Association Limited (IFSA) has issued a new edition of its "Blue Book".

It contains a number of significant changes as a result of amendments to the Corporations Act, particularly CLERP 9 and the release by the ASX Corporate Governance Council of its ‘Principles of Good Corporate Governance and Best Practice Recommendations’.

The significant new additions cover:
• CLERP 9 amendments
• incorporation of ASX Corporate Governance Council Best Practice Recommendations
• ‘pre-nuptial’ agreement disclosure for Directors
• banning of non-recourse loans
• changes to statement on Beneficial Shareholder Information
• ban on proxy ‘renting’
• proxy voting Standard

The Blue Book, formally known as IFSA Guidance Note No.2: ‘Corporate Governance: A guide for Investment Managers and Corporations’, is published by IFSA to assist its Members to pursue an active role in monitoring the Corporate Governance responsibilities of the companies in which they invest.

Print This Post

Posted 7th November 2004 by David Jacobson in Corporate Governance

November 4, 2004

GST on long-term contracts

On 21 November 2003, the Government announced its intention to legislate to deal with the application of GST to long-term non-reviewable contracts that remain GST-free at 30 June 2005. The Government released the draft legislation on 29 October 2004 for comment.

Comments will need to be received by close of business on Friday 12 November 2004.

Under the draft:

suppliers with long term non-reviewable contracts will be able to increase their prices to include GST from 1 July 2005, if their customer agrees

If the customer does not agree, the supplier can apply to an assessor to determine an appropriate change to the price

If the parties still cannot agree, GST liability will be imposed directly on the customer.

Print This Post

Posted 4th November 2004 by David Jacobson in Business Planning