Compliance « Australian Regulatory Compliance Review from Langes+ Lawyers

April 26, 2013

Making sense of regulatory news

Whether you call it “being connected” or “the fear of not knowing”, more of us are getting our news electronically faster than the print media and evening television news can deliver it.

The problem with the “river of news” is putting it into context and identifying what is important to you.

With the volume of regulatory and market information you receive daily to make sure you’re not missing out on what’s going on (including news you get from us), it’s sometimes easy to think that rather than set up another project you should just do what everyone else is doing to get by.

The only way to make sure you’re not missing out on the important things is to understand what they are so you can identify your risks and set your priorities!

To provide the context for the compliance river of news and help you identify the important information we have set up a website containing videos, resources and tests.

Have a look at what we’ve done. It’s online so you don’t have to travel to a conference.

It complies with ASIC’s CPD requirements. And the website keeps training records for you.

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Posted 26th April 2013 by David Jacobson in Compliance, Financial Services

April 10, 2013

ASIC argues the benefits of co-operation

ASIC has released Information Sheet 172 Cooperating with ASIC (INFO 172) explaining the benefits of co-operating with ASIC investigations and the factors ASIC takes into account when assessing co-operation.

ASIC says that co-operating with it may benefit a person or company in many ways including the type of enforcement action it pursues and whether ASIC will give credit for cooperation in proceedings it commences.

There is no doubt a good working relationship between businesses and ASIC is of benefit to both sides. Although ASIC has a significant budget it does not have unlimited resources.

Co-operation and communication with ASIC can be difficult in a national or international business involving multiple groups where they may not be a single point of contact for all regulatory issues.

Who is responsible for ASIC requests for information or unscheduled visits?

Businesses need to develop a policy on these issues as part of their compliance framework.

Of course businesses may have a valid different interpretation of the law from ASIC. But often those disputes can be resolved on a practical co-operative basis without waiving important rights.

INFO 172 follows releases on ASIC’s information gathering powers (refer 11-194AD), public comment and enforceable undertakings (refer 12-29MR), surveillance work (refer 12-224MR), and claims of legal professional privilege (refer 12-314MR).

ASIC’s enforcement report for the period 1 July 2012 to 31 December 2012 summarises ASIC’s actions against a range of gatekeepers in the Australian financial system, such as credit licensees, insurance representatives, financial advisers, auditors and directors. ASIC focuses on four key attributes of gatekeepers: competence, diligence, honesty and independence.

During the period, 44 of the 88 enforcement outcomes in the market integrity, corporate governance and financial services areas involved cooperation between the person concerned and ASIC.

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Posted 10th April 2013 by David Jacobson in Compliance, Corporations Act, Risk Management

April 3, 2013

Case note on bid-rigging: Norcast v Bradken

In Norcast S.ár.L v Bradken Limited (No 2) [2013] FCA 235 Judge Gordon of the Federal Court of Australia decided that a bid rigging arrangement occurred between Bradken and Castle Harlan, whereby Castle Harlan agreed to bid for Norcast’s subsidary Norcast Wear Solutions, Inc (NWS), a Canadian mining consumables company and Bradken agreed not to bid for NWS in contravention of sections 44ZZRJ and 44ZZRK of the Competition and Consumer Act 2010 (Cth) (the cartel provisions). The cartel provisions were applied even though the bid was made in USA for a Canadian company.

In a lengthy and complex judgment Judge Gordon concluded that had Bradken and Castle Harlan not entered into the Bid Rigging Arrangement, Bradken would have made a bid for NWS in excess of the approximately US$190 million which it ultimately paid for NWS. She assessed damages at US$22.4 million (being the difference between the US$212.4 million including costs and expenses which Bradken did in fact pay to acquire NWS and the US$190 million Norcast received from Castle Harlan).

An interesting aspect was the attempted avoidance of the effect of a Non-Disclosure Agreement by Castle Harlan by appointing Bradken as its consultant.

An appeal is expected.

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Posted 3rd April 2013 by David Jacobson in Compliance, Trade Practices

March 22, 2013

Risk management of responsible entities

ASIC has released Consultation Paper 204 Risk management systems of responsible entities (CP 204) containing proposed regulatory guidance on risk management practices for responsible entities in the managed funds sector that are Australian financial services (AFS) licensees that are not regulated by the Australian Prudential Regulation Authority (APRA).

Subject to the passage of the Superannuation Legislation Amendment (Service Providers and other Governance Measures) Bill 2012, the proposed requirements would also apply to APRA-regulated registrable superannuation entity licensees (RSEs) that manage non-superannuation registered managed investment schemes (dual-regulated entities).

The proposals deal with:

ensuring risk management systems comprise processes to identify, assess and treat risks
ensuring these processes are suitable for individual business objectives and operations
ensuring that risk management systems address all material risks, including strategic, governance, operational, investment and liquidity risks, and
reviewing risk management systems regularly, and no less than annually, for appropriateness, effectiveness and relevance to individual businesses.

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Posted 22nd March 2013 by David Jacobson in Compliance, Corporations Act, Investments, Risk Management, Superannuation

Grounds of sexual discrimination to be widened

The Government has introduced the Sex Discrimination Amendment (Sexual Orientation, Gender Identity and Intersex Status) Bill 2013 into the House of Representatives.

If passed the Sex Discrimination Act will be amended to extend the protection from discrimination to the new grounds of sexual orientation, gender identity, and intersex status.

The existing ground of ‘marital status’ will be extended to ‘marital or relationship status’ to provide protection from discrimination for same-sex de facto couples.

Discrimination on these new grounds will be unlawful in the same circumstances as for other grounds already covered by the SDA. The changes ensure that same-sex relationships will be treated in the same way as other de facto relationships for the purposes of Commonwealth entitlements and programs, including taxation, superannuation, health, aged care, immigration, child support and family law.

The Senate Legal and Constitutional Affairs Legislation Committee has an inquiry into the Bill.

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Posted 22nd March 2013 by David Jacobson in Business Planning, Compliance, Workplace

February 12, 2013

Final Reminder: Financial Services CPD Seminars

Our next Financial Services CPD Seminars will discuss the Privacy Act amendments relating to direct marketing and credit reporting, with separate Credit Act update sessions for marketers and collections managers.

There will also be a “core” breakfast session specifically for Responsible Managers.

Key Information
* Cost: $550 (incl GST) per person for the whole program
* All sessions bookable separately
* CPD points: 6 points
* Time: 8am – 3pm
* Location: Brisbane, Sydney, Melbourne
* Designed for: Financial Services Managers who wish to stay up to date with all the relevant financial services and credit industry regulatory changes

When and where
Brisbane: Tuesday 19 February 2013
Sydney: Wednesday 20 February 2013
Melbourne: Tuesday 26 February 2013

More information and registration

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Posted 12th February 2013 by David Jacobson in Compliance, Corporations Act, Financial Services, National Credit Code

February 5, 2013

Regulatory timeline 2013-14

We have updated our regulatory timeline tracking new legislation to help you plan projects you need to be working on.

Download

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Posted 5th February 2013 by David Jacobson in Business Planning, Compliance

January 31, 2013

Developing a social media policy for your business

While social media (any form of interactive online communication) is a relatively new marketing channel for you to generate new business and interact with customers, the laws that apply to other means of communication apply equally to social media.

The risks include potential consumer protection law breaches and other legal, reputation, and operational risks.

Increased risk can arise from poor oversight or control.

The ACCC has published an Information Sheet setting out its view that businesses using social media channels like Facebook, Twitter and YouTube have a responsibility to ensure content on their pages is accurate, irrespective of who put it there.

A business that has chosen not to use social media should still be prepared to address the potential for liability for defamation or negative comments or complaints that may arise in social media.

Activities that result in dissatisfied consumers and/or negative publicity could harm your reputation even if you have not breached any law.

Employees’ communications via social media, even through employees’ own personal social media accounts, may be viewed by the public as reflecting their employer’s official policies or may otherwise reflect poorly on the employer. Therefore, you should establish appropriate policies to address employee participation in social media that implicates your business.

If you haven’t reviewed your policy recently (or don’t have one) here are some issues to consider:

Have you planned for compliance with laws relating to data security, privacy, debt collection, misleading or deceptive marketing, the Spam Act, workplace issues, consumer protection, fraud, consumer complaints, payment system issues and AML/CTF ?
Do you intend to limit comment to authorised employees or allow all staff to make comments about your business whether or not they are at work?
If you allow your employees to use social media on behalf of the company, can they take their social media account with them when they leave?
Do you require all employees using social media to talk about the business to disclose their association with the business?
Do you prohibit the disclosure of confidential business information?
Do you prohibit the disclosure of customer information?
Do you require staff to inform you about negative comments about your business they become aware of?
Do you prohibit unlawful or offensive comments?
Will a breach of your policies result in dismissal?
What arrangements do you have for keeping a record of your social media activity?

What do you need to do?
1. Develop policies and procedures (either stand-alone or incorporated into other policies and procedures) regarding the use and monitoring of social media and compliance with all applicable laws. The policies and procedures should address risks from online postings, edits, replies, and retention.

2. Implement an employee training program that incorporates your policies and procedures for official, work-related use of social media.

3. Monitor information posted to social media sites administered by you.

Background

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Posted 31st January 2013 by David Jacobson in Compliance, Marketing, Privacy, Web/Tech, Workplace

January 29, 2013

Financial Services Seminars: earlybird discount closing

The earlybird discount for our February seminars ends on Thursday 31 January.

The program features a breakfast session for Responsible Managers and a session dealing with Privacy (including the new Australian Privacy Principles and credit reporting) which will be relevant to both marketers and collections staff.

When and where
Brisbane 19 February 2013
Sydney 20 February 2013
Melbourne 26 February 2013
Adelaide 27 February 2013

More information

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Posted 29th January 2013 by David Jacobson in Compliance, Financial Services

January 21, 2013

Director liability issues for 2013: taking reasonable steps to comply

From time to time clients ask us for a list of all the things for which directors can be liable.

When creating a list of all those things that can create liability for directors it’s important to firstly understand that corporate governance consists of improving the performance of the business in the best interests of shareholders as well as managing risks and monitoring compliance. The board’s role is not limited to compliance.

When looking at compliance issues you should distinguish between those things that a director does (or fails to do) personally as well as things that the company does (or fails to do) for which a director is liable.

The first category (liability for personal conduct) includes: don’t steal, don’t lie or cheat, don’t get a personal benefit by misusing confidential information, don’t fail to do your best for the company because you have a competing personal interest.

The second category (personal liability for corporate conduct) includes liability for insolvent trading, misleading statements to investors as well as breaches of environmental and hazardous goods legislation, workplace health and safety laws and consumer protection laws.

Some issues will be regular items on your agenda (eg director disclosures), some will be six-monthly or annual items (eg financial reports, executive remuneration, annual licence renewals) and others will be special matters depending on your activities (eg signing off on fundraising).

If you are prosecuted for a corporate breach, the key issue is whether you took “reasonable steps” to ensure that the company complied with the provision.

Under some laws you are presumed to have taken reasonable steps unless the prosecution proves otherwise. Under other laws you have the burden of proving you took reasonable steps. Background

What are reasonable steps?

The Corporations Act does not define reasonable steps. They vary with the circumstances.

In ASIC v Healey (Centro) Judge Middleton discussed the minimum steps a director needed to take before approving financial statements.

Unfortunately the director liability laws for state-based offences still vary between states.

Section 97 of the Miscellaneous Acts Amendment (Directors’ Liability) Act 2012 NSW defines “reasonable steps” as follows:

reasonable steps, in relation to the commission of an executive liability offence, includes, but is not limited to, such action (if any) of the following kinds as is reasonable in all the circumstances:
(a) action towards:
(i) assessing the corporation’s compliance with the provision creating the executive liability offence, and
(ii) ensuring that the corporation arranged regular professional assessments of its compliance with the provision,
(b) action towards ensuring that the corporation’s employees, agents and contractors are provided with information, training, instruction and supervision appropriate to them to enable them to comply with the provision creating the executive liability offence so far as the provision is relevant to them,
(c) action towards ensuring that:
(i) the plant, equipment and other resources, and
(ii) the structures, work systems and other processes, relevant to compliance with the provision creating the executive liability offence are appropriate in all the circumstances,
(d) action towards creating and maintaining a corporate culture that does not direct, encourage, tolerate or lead to non-compliance with the provision creating the executive
liability offence.

The proof required to show you took reasonable steps varies with the alleged offence.

The starting point is to carry out a risk assessment appropriate to your business.

But don’t forget to spend time growing the business.

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Posted 21st January 2013 by David Jacobson in Compliance, Corporate Governance, Corporations Act, Trade Practices, Workplace