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November 16, 2005

FSR refinement: non-cash payment facilities

The Australian Securities and Investments Commission (ASIC) has released a new policy on the regulation of non-cash payment (NCP) facilities under the Corporations Act.

ASIC’s policy on the regulation of NCP facilities is set out in Policy Statement 185 Non-cash payment facilities [PS 185].

The policy statement also describes the class order relief ASIC has granted to:

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Posted 16th November 2005 by David Jacobson in Financial Services

November 12, 2005

Banking and Financial Services Ombudsman 2005 Annual Report

The Banking and Financial Services Ombudsman’s 2005 Annual Report shows that there was an increase in reported disputes of 4.2 per cent to 6,104. The trend of a higher proportion of complex cases continued this year.


Consumer Finance (32.5 per cent) was the top product category in disputes this year. The other main product categories were Deposit Accounts (18.5 per cent), Housing Finance (18.2 per cent) and Payment Systems (17.1 per cent).

The main product complained about in the Consumer Finance category continues to be the credit card account. Complaints about this product have increased from 1,101 last year to 1,189 this year. The main
problems identified were the same as last year: unauthorised transactions and maladministration in granting credit.

The main product complained about in the Deposit Account category was the statement savings account, with incorrect fees identified as the main problem.

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Posted 12th November 2005 by David Jacobson in Financial Services

November 11, 2005

Regulatory impact of Anti-Terrorism Bill (no.2) 2005

The Bill was introduced on 3 November. I have previously discussed Schedule 6 notices (National Security Notices) here and here.

The Senate Legal and Constitutional Committee has now released details of its inquiry into the Bill. Public hearings will start on 14 November. It must report by 28 November 2005.

The Committee has released copies of the numerous submissions received by it.

From a business and financial services viewpoint the submissions by the Australian Bankers’ Association (ABA)  and the University of NSW Centre of Public Law are the most relevant.

The ABA’s submission focussed on lack of industry consultation on the detail of the provisions relating to counter-terrorist financing, difficulties in the application of certain provisions, the key issue being changes in payment processing and possible inconsistencies in content and implementation timing with the forthcoming anti-money laundering requirements.

The UNSW submission includes the following comments:

"This proposed offence [of financing terrorism] extends criminal liability too far, and makes it impossible for any person to know the scope of their legal liabilities with any certainty. Terrorists obtain financing from a range of sources, including legitimate institutions (such as money laundering through banks), and employ a variety of deceptive means to secure funding. This offence would require every Australian to vigilantly consider where their money might end up before donating to a charity, investing in stocks, depositing money with a bank, or even giving money as birthday present."

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Posted 11th November 2005 by David Jacobson in Business Planning

Can a website be a financial service product or financial product advice?

Online Investors Advantage
Incorporated (OIA) promoted
INVESTools website as part
of the ‘Financial Superstars’ seminars held in Brisbane, Sydney and
Melbourne in July 2004.

ASIC commenced proceedings against Online Investors
Advantage Incorporated (OIA), a USA-based company, in July 2004, in
relation to a series of workshops being promoted at ‘Financial
Superstars’ seminars, and in particular, OIA’s INVESTools website
service (www.investortoolbox.com).

The INVESTools website was promoted by OIA as a tool
to analyse data to identify whether specific US stocks should be bought
or sold.

Although OIA holds an Australian financial services
licence (AFSL), ASIC alleged that OIA was not licensed to sell its
INVESTools website service because the website service is a financial
product, or because it provides financial advice which OIA is not
authorised to provide under the conditions of its existing licence.

OIA argued that the INVESTools website was neither a financial product nor financial product advice.

In AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v ONLINE TRADERS ADVANTAGE INCORPORATED the Supreme Court of Queensland rejected these arguments and found that the website was
a source of financial advice in respect of a particular financial
product or class of financial product within the meaning of the
Corporations Act.

However claims by ASIC of misleading and deceptive advice and failing to provide a Financial Services Guide and other alleged breaches were not upheld by the Court.

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Posted 11th November 2005 by David Jacobson in Financial Services

November 4, 2005

Guide to unit pricing

The Australian Prudential Regulation Authority (APRA) and the Australian Securities & Investments
Commission (ASIC) today jointly published Unit Pricing – Guide to good practice for the life insurance, superannuation and funds management industries.

The guide outlines a range of good practices and has been developed following a
joint review by APRA and ASIC of unit pricing practice.

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Posted 4th November 2005 by David Jacobson in Financial Services

November 3, 2005

Industrial relations reform

The Workplace Relations Amendment (Work Choices) Bill 2005 (pdf) was introduced into the House of Representatives on 2 November.

The nearly 700 page Bill will rewrite Australia’s industrial relations laws.

A new Fair Pay Commission will be established to set minimum wages.

Unfair dismissal

The
government proposes to exempt businesses employing up to 100 employees
from the unfair dismissal laws.

For businesses with over 100 employees, employees must have been employed for six months before they
can pursue an unfair dismissal remedy. This is an extension of the
current 3-month qualifying period.

Protection against unlawful
termination (termination on the basis of a discriminatory reason) will
be retained. Eligible employees will be able to
access up to $4,000 worth of legal advice if they claim to have been
unlawfully dismissed.

Scope 

As the states will not give up their constitutional powers on workplace
relations to the Commonwealth, the government intends to move towards a
national workplace relations system relying on the corporations power
under section 51(xx) of the Commonwealth Constitution. Accordingly the law will only apply to employers which are companies.

Laws which will remain regulated by
the states include those such as occupational health and safety,
workers’ compensation, trading hours, public holidays and long service
leave. The government says that those employers and employees not
covered by WorkChoices such as in unincorporated businesses in the
state systems and some state government employees (where they are not
already in the national system) stay where they are until the state
governments decide otherwise.

Transitional period

  A
3-year transitional period is proposed to apply for constitutional
corporations transferring from state systems, during which time their
existing awards and agreements will transfer to the federal system as
transitional federal agreements. A 5-year transitional period will
apply to non-constitutional corporations currently under the federal
system, and their existing awards and agreements will continue to apply.

More from the dedicated WorkChoices website

Queensland is investigating mounting a High Court challenge

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Posted 3rd November 2005 by David Jacobson in Business Planning
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