May « 2009 « Australian Regulatory Compliance Review from Langes+ Lawyers

May 8, 2009

APRA releases draft standards for life insurers

The Australian Prudential Regulation Authority (APRA) has released a consultation package on proposals to enhance the prudential framework for life insurance companies.

The package, which contains a discussion paper and four draft prudential standards, seeks comments on proposed changes to:

draft Prudential Standard LPS 510 Governance (LPS 510);
draft Prudential Standard LPS 520 Fit and Proper (LPS 520);
draft Prudential Standard LPS 310 Audit and Actuarial Requirements (LPS 310); and
draft Prudential Standard LPS 320 Actuarial and Related Matter(LPS 320).

The package also outlines some minor consequential amendments to the life insurance reporting standards.

The proposed changes to LPS 510 and LPS 520 are in response to the Financial Sector Legislation Amendment (Enhancing Supervision and Enforcement) Bill 2009 (NOHC Bill), introduced into Parliament on 19 March 2009. The Bill proposes to amend the Life Insurance Act 1995 (Life Act) to bring non-operating holding companies (NOHCs) of life companies, once authorised, under the prudential supervision of APRA, including the power to issue prudential standards in relation to NOHCs.

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Posted 8th May 2009 by David Jacobson in Insurance

May 7, 2009

Draft Financial Services Modernisation Bill released

Senator Nick Sherry, Minister for Superannuation and Corporate Law, has released the Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009 . The Bill, if passed, provides for the national regulation of trustee companies, margin loans and debentures.

Trustee companies

Trustee companies are currently regulated at the State and Territory level. There are currently ten private licensed trustee companies operating in Australia. The new regime will provide authority under Commonwealth law for trustee companies to perform their traditional functions, deem such services to be “financial services” and require them to hold an Australian Financial Services Licence when selling such services.

ASIC will be the sole national regulator for trustee companies.

Debentures

The Bill will harmonise the legal regime to require all retail debentures and promissory notes to be subject to the full range of consumer disclosure and protection measures currently only applicable to debentures. This will include the requirement to have a trust deed and trustee arrangements, and to issue a full prospectus.

Additionally, debenture trustees will need to be registered. The public register of debenture trustees will be established and maintained by ASIC.

Margin Lending

Margin lending will be added to the Corporations Act 2001 as a financial product. Lenders will be required to hold an Australian Financial Services Licence, will be regulated by ASIC, will be required to be members of low-cost external dispute bodies, will be required to clearly disclose fees and commissions before lending and will have to lend under a margin lending-specific set of responsible lending obligations.

The Government’s Financial Services Working Group will shortly release a simplified margin lending Product Disclosure Statement. The new disclosure regime will commence in conjunction with the new laws.

The Bill will clarify that lenders are responsible for notifying borrowers of a margin call, unless arrangements are in place for the financial planner to do so.

Timetable

The public exposure period ends on 29 May, 2009 and, subject to the agreement of the States and Territories, the Bill will be introduced into Parliament in June.

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Posted 7th May 2009 by David Jacobson in Corporations Act, Financial Services

Clarity in pricing commences on 25 May

A new Section 53C of the Trade Practices Act will commence on 25 May 2009.

The amendments require that where a business makes a price representation to a consumer and that amount is less than what the consumer will actually have to pay to acquire the goods or services, the business must also prominently state a total price as a single figure.

The Act does not prohibit component pricing, provided that a single figure price is also displayed.

A breach of the section may result in either a civil penalty or criminal penalties.

ACCC Guidelines on component pricing

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Posted 7th May 2009 by David Jacobson in Trade Practices

Anti-competitive creeping acquisitions under review

The Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, Chris Bowen MP, has released a discussion paper on creeping acquisitions.

The term creeping acquisitions refers to the acquisition of a number of individual assets or businesses over time that may collectively raise competition concerns, but which individually are unlikely to contravene section 50 of the Trade Practices Act 1974.

Interested parties are invited to submit comments by 12 June.

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Posted 7th May 2009 by David Jacobson in Trade Practices

May 6, 2009

Keeping track of regulation changes: when is an announcement an “aspiration” or a real law?

This article by me was first published in Retail Banking Review.

A media release, speech or interview transcript is not the equivalent of a new law passed by Parliament regardless of the language used by a Government Minister.

In these days of complaints about inadequate supervision of insolvent financial service providers, excessive executive remuneration, bank exit fees, ATM fees, credit card charges and break fees, politicians are quick to announce an inquiry, investigation, industry summit or the like to give an impression of action. But government policy announcements or ASIC and ACCC discussion papers are not changes to the law until passed by Parliament (and the Senate agrees). Except for taxation changes, most new laws only take effect when they are actually passed. Businesses incur costs in getting ready for and implementing changes.

In addition the Commonwealth government can find it hard to implement changes which need the co-operation of the States even when COAG has agreed to the changes in principle. Consumer credit and consumer protection policy reforms are examples of this process and what might happen if policy changes are not co-ordinated .

(more…)

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Posted 6th May 2009 by David Jacobson in Financial Services

May 5, 2009

Draft Corporations Amendment (Improving Accountability on Termination Payments) Bill 2009 released

Senator Nick Sherry, Minister for Superannuation and Corporate Law, has released an exposure draft of the Corporations Amendment (Improving Accountability on Termination Payments) Bill 2009 and Regulations. The Bill will change the regulatory framework relating to the payment of termination benefits to company directors and executives currently set out in Sections 200F and 200G of the Corporations Act.

If passed, the Bill will:

lower the threshold at which shareholder approval is required for a termination payment from seven times an annual remuneration package to one times average annual base pay;
expand the number of company officers for which approval is required from directors to also include senior executives and key management personnel;
broaden the definition of what constitutes a "benefit", including a new Regulation-making power to deem new forms of payment that seek to avoid the law as a termination benefit;
clarify the definition of a termination benefit and expand it to include the accelerated or automatic vesting of options and payments in lieu of notice;
require immediate repayment of unauthorised termination benefits. Any unpaid benefits will continue to be held on trust for the company;
impose higher penalties for breaches of sections 200B, 200C and 200D, with potential fines for individuals to be increased to $19,800, up from $2,750, together with the option of six months imprisonment, and for corporations to be increased to $99,000, up from $16,500 ; and
a mechanism for shareholders to assess golden handshakes in the context of the recipient's actual performance by requiring shareholder votes on termination benefits to take place at a future annual general meeting following an executive's departure and a ban on the calling of extraordinary general meetings that are only to undertake such an approval vote.

The Bill will not alter contractual arrangements entered into before the Bill becoming law, including defined benefit superannuation arrangements, and excludes statutory superannuation payments from the calculation of "termination benefits".

The Rudd Government has also asked the Productivity Commission (PC) to undertake an inquiry into executive remuneration. The PC inquiry will take the new laws into account as part of its inquiry into Australia's executive remuneration framework.

The Bill, which will be introduced into Parliament during the Winter sittings, will be open for public consultation for a four-week exposure period ending on 2 June, 2009

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Posted 5th May 2009 by David Jacobson in Corporate Governance, Corporations Act

Privacy Commissioner complaint case notes 1 – 6 for 2009

The Australian Privacy Commissioner, Karen Curtis, has published six new case notes:

A v Medical Practitioner [2009] PrivCmrA 1:
The complainant wrote twice to their medical practitioner requesting a copy of all of the personal information that the practitioner held about them in their medical record. After a delay, the medical practitioner offered the complainant the opportunity to view, but not copy, their medical record. The practitioner also offered to assist the complainant in understanding the content of the detailed record. The Commissioner formed the view that in this case, the medical practitioner had met the requirements of NPP 6.1 by offering the complainant the opportunity to view their medical record.
B v Cleaning Company [2009] PrivCmrA 2:
An organisation contacted the complainant’s former employer, a cleaning company, seeking information as to the complainant’s whereabouts. A statement later provided to the complainant by the organisation indicated that the cleaning company had disclosed the complainant’s personal information to the organisation, including their address and financial details. The complainant complained that the personal information collected for the purposes of their employment was inappropriately disclosed by the cleaning company. The Commissioner examined the information available and was of the view that the complainant’s personal information had been wrongly disclosed by the cleaning company.
C v Commonwealth Agency [2009] PrivCmrA 3:
The complainant was receiving a benefit from a Commonwealth government agency. The complainant applied for a change to the benefit but was refused. Dissatisfied with the agency’s decision, the complainant lodged a complaint with the appropriate tribunal in an effort to have the agency’s decision changed. The complainant claimed that the agency gave the tribunal documents which were not relevant to the matter being heard. They claimed that the disclosure of the personal information in those documents was unnecessary. The agency claimed that it was obliged to provide those documents to the tribunal. The Commissioner was satisfied that the agency had properly considered whether all of the information it held about the complainant was relevant to the matter being reviewed by the tribunal, and had only provided the tribunal with that information in response to its notice.
D v Finance Company [2009] PrivCmrA 4:
The complainant was unaware that the account had fallen into arrears until they found a default listed on their consumer credit file. The Commissioner found that when the complainant’s account fell into arrears the finance company had attempted to contact them by writing to them at their last known address. However, during the investigation it became apparent that the address used by the finance company was incomplete. The finance company had omitted enough information from the address so that it was unlikely that the complainant could have received the letters advising them the account was in arrears and that the default would be listed on their credit report. The complainant indicated that they would be satisfied with the payment default listing being removed from their consumer credit file. The finance company agreed and promptly contacted the credit reporting agency to ask that the listing be deleted. The credit reporting agency removed the payment default listing.
E v Advertiser [2009] PrivCmrA 5:
An advertiser contacted a credit reporting agency to have the complainant’s failure pay the invoice recorded on their consumer credit file. The complainant claimed that the default listing was invalid as they had not engaged the services of the advertiser. The Commissioner considered all of the information available and formed the view that the complainant had agreed to the service provided by the advertiser, and had elected to be invoiced for payment at a later date.
Own Motion Investigation v Medical Centre [2009] PrivCmrA 6:
The Privacy Commissioner was informed that a number of medical documents, including patients’ prescriptions and pathology results, were found scattered in a public park adjacent to a private medical centre. The name of the centre was visible on some of the documents. The documents included patients’ names, addresses and phone numbers. The information given to the Commissioner suggested that the documents had come from a large bin at the rear of the private medical centre. The medical centre found that a lock on a medical waste bin, kept outside at the rear of the centre, had been tampered with and the contents of the bin thrown around an adjacent public park. Having regard to the sensitivity of the information held by the medical centre, the Commissioner and the centre devised a number of steps that the centre could take to ensure that information was kept securely. The medical centre also advised the Commissioner that it would write to all of its patients and advise them of the matter and the steps the medical centre was taking to address it. The Commissioner considered all of the action taken by the medical centre and was satisfied that it had taken reasonable steps to protect the sensitive information it holds from misuse and loss, and from unauthorised access, modification or disclosure.

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Posted 5th May 2009 by David Jacobson in Privacy

May 4, 2009

Carbon Pollution Reduction Scheme changes

The Prime Minister has announced that the Carbon Pollution Reduction Scheme will now be phased in from 1 July 2011 and a new 25 per cent by 2020 target has been proposed.(see here)

The changes include:

1. A delay in the start date of the Carbon Pollution Reduction Scheme of one year.

2. To assist businesses:

A one year fixed price period will be introduced. Permits will cost $10 per tonne of carbon in 2011-12, with the transition to full market trading from 1 July 2012.
A new Global Recession Buffer will be provided as part of the assistance package for emissions intensive trade exposed industries.
Industries eligible for 60 per cent assistance will receive a 10 per cent buffer, while industries eligible for 90 per cent assistance will receive a 5 per cent buffer.
Eligible businesses will receive funding to undertake energy efficiency measures from 1 July 2009.

3. A commitment to reduce carbon pollution by 25 per cent of 2000 levels by 2020 if the world agrees to an ambitious global deal to stabilise levels of CO2 equivalent in the atmosphere at 450 parts per million or less by 2050.

The Carbon Pollution Reduction Scheme legislation will be introduced when Parliament resumes.

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Posted 4th May 2009 by David Jacobson in Environment

May 3, 2009

COAG communique 30 April 2009

The Council of Australian Governments (COAG) meeting in Hobart on 30 April 2009 has released a communique outlining its agreements including:

national disaster arrangements;
jobs and training;
energy efficiency; and
regulation reform.

COAG endorsed a series of reforms, recommended by the Business Regulation and Competition Working Group (BRCWG):

a further step towards the development of a national licensing system for airconditioning and refrigeration mechanics,building and building related occupations,electrical,land transport (passenger vehicle drivers and dangerous goods only),maritime, plumbing and gasfitting and property agents;
a further step towards the development of a National Construction Code, which will consolidate building, plumbing, electrical and telecommunications regulations;
agreement to set up a taskforce on reform of the regulation of the legal profession, with the objective of uniform laws across jurisdictions;
inclusion of the regulation of the not-for-profit sector as part of the BRCWG’s 2009 workplan; and
agreement to the National Mine Safety Framework Implementation Report, which includes strategies for achieving a consistent Occupational Health and Safety regime in the mining industry.

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Posted 3rd May 2009 by David Jacobson in Business Planning

May 1, 2009

Bell Group v Westpac orders

In The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239 (discussed here) the Western Australian Supreme Court decided that the banks were successful in their defences against claims of fraud and knowingly assisting a breach of directors' duties but that the banks had received trust property knowing that it arose from a breach of the directors' fiduciary duties.

Now, in The Bell Group Ltd (in liq) -v- Westpac Banking Corporation [no 10] [2009] WASC 107 the Court has ordered that the defendant banks pay various amounts and interest totalling over $1.5 billion back to Bell Group companies while at the same time allowing the Banks to lodge proofs of debt.

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Posted 1st May 2009 by David Jacobson in Corporations Act