July « 2006 « Australian Regulatory Compliance Review from Langes+ Lawyers

July 5, 2006

Who regulates religious charitable development funds?

The interesting thing about "one size fits all" regulation is attempting to classify organisations which do not easily fall within the definitions.

ASIC is still trying to understand mutuals and the latest news from APRA shows that it has had to come to terms with religious charitable development funds (also known as church funds).

These funds are typically not corporations or financial institutions but receive significant amounts of money from the public.

APRA has introduced a class exemption order (Banking exemption No. 1 of 2006) that standardises the conditions under which religious charitable development funds can be exempted from the requirement to be authorised under the Banking Act 1959. The exemption lists the funds that can apply for exemption if they meet the conditions.

To distinguish the funds from regulated retail financial institutions, the conditions preclude funds from offering cheque facilities (except in limited circumstances) or EFTPOS and ATM access; require increased
disclosure that funds are not subject to APRA’s prudential oversight; and limit advertising to printed material produced under the auspices of the sponsoring religious institution. However, funds are able to
continue internet home pages and internet access by investors, subject to the disclosure requirements.

Affected funds have until 1 July 2007 to meet the conditions.

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Posted 5th July 2006 by David Jacobson in Compliance, Financial Services

July 4, 2006

Identity fraud and security breach update

Basic data security breaches are continuing: in Australia, the Defence Forces investigator into the Kovco death and missing body left a CD containing her report in an airport computer and a Australian High Tech Crime Centre police officer lost a memory stick containing bank customer details.

The Privacy Rights Clearinghouse has updated its list of US data breaches.

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Posted 4th July 2006 by David Jacobson in Compliance, Privacy

Basel Committee Principles of Corporate Governance

The Basel Committee on Banking Supervision has updated its report Enhancing Corporate Governance for Banking Organisations which gives guidance to help promote the adoption of sound corporate governance practices by banks.

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Posted 4th July 2006 by David Jacobson in Corporate Governance, Financial Services

July 3, 2006

Unsolicited increases in credit card limits

The Banking and Financial Services Ombudsman‘s latest Bulletin (pdf) discusses procedures lenders should follow in resolving disputes over making unsolicited offers to increase credit card limits.

Giving an example of a person on an annual income of $38,000 who was experiencing difficulty meeting the minimum monthly payments on credit cards with two lenders with limits totalling $41,000, the Ombudsman has suggested that lenders should apply their criteria for new credit to the financial position of the disputant at the time the unsolicited offer was made to establish the amount that should have been offered.

The Ombusdman also discusses a number of cases where inaccurate or incomplete information was provided to the lender in the application for a new credit card. In some cases it is said that, if the lender had undertaken verification of that information, the inaccuracies or missing information could have been discovered.The Ombudsman considers that in most cases of credit card lending the lender is entitled to rely on the information provided by the applicant. However, he will consider whether the information provided was clearly incorrect or nonsensical on its face.

The Ombudsman contrasts credit cards with personal loans: it is prudent lending practice for the lender to obtain information about the nature and period of employment when assessing any application for a personal loan, including for the young applicant.

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Posted 3rd July 2006 by David Jacobson in Financial Services

July 2, 2006

The Government’s Vision for a Single Health and Social Services Smartcard

The Minister for Human Services Joe Hockey has spelt out the Government’s Vision for a Single Health and Social Services Smartcard (pdf).

Some key quotes:

The fact is if you were to invent or create the optimum service delivery model, it would be internet based. However, there are Australians that neither understand the internet nor have access to it.

The Queensland government in particular has formed a working group for the Federal government, as the Queensland government proceeds down the path of rolling out its smart card driver’s licence from the beginning of 2008.

we are working closely with the financial services sector to ensure that we have consistent technology…that allows us to deliver, in my case, one hundred billion dollars a year, potentially through the banking system

one of the key applications of the new health and welfare access card is to enable it to be used for emergency payments, and that it could be used at EFTPOS terminals, and in automatic teller machines, to enable people to access cash immediately.

We are also determined to avoid application creep. It should be noted that this is a replacement card. It is a replacement card for the Medicare card, and in total is a replacement for seventeen cards and vouchers across the Human Services family. And because it is a replacement card, it is far easier to deal with the logistics of the roll out even though we anticipate that from 2008 it will take two years for the entire population that wants to access the card to receive one.

Four percent of our interactions are online. And one of the challenges for us has been, in delivering better services, one of the challenges has been increasing the level of online activity and being able to identify the person claiming to be accessing the online service. Now, there is a compelling argument to having a PIN associated with the smart card. If that is the case, then that solves a lot of our online authentication needs.

It is a replacement of a magnetic strip with a chip….The information in the mandated fields on the chip will contain your basic identity information. Name, address, date of birth, obviously a Medicare number. And the only field which we control, the government controls, will be your concessional status, whether you are a pension concession recipient, or a health care card recipient, and so on. That is the only field the government will control. All other mandated fields are in the control of the individual.

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Posted 2nd July 2006 by David Jacobson in Business Planning, Privacy

OECD Anti-Bribery Convention Report on Australia

The OECD has released its report on the level of implementation by Australia of its commitments under the OECD Convention on Prevention of Bribery of Foreign Public Officials.

The Report makes a number of recommendations to enhance Australia’s compliance with the Anti-Bribery Convention. It notes that although no cases have been prosecuted, the Australian Federal Police has opened three investigations (one which has been terminated) and is currently conducting two investigations.

It will be interesting to see whether the Cole Inquiry report makes any recommendations this area.

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Posted 2nd July 2006 by David Jacobson in Compliance