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March 15, 2005

Third Party Signatory requirements

Austrac has issued an information circular clarifying which account signatories must be identified by cash dealers under the Financial Transaction Reports Act.

A key quote:

Any individual who has the ability to authorise a debit transaction for an account is considered to be a signatory to that account and therefore must be identified by the cash dealer offering the account. This applies regardless of the signatory being a third party acting as a professional for their client, an authorised staff member of an entity, the formal holder of the account, or a subsidiary card-holder of the account (if applicable).

The circular also deals with an individual who has ‘authorising officer’ access to a software-based product used to transmit electronic payment instructions to a cash dealer in relation to an account.

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Posted 15th March 2005 by David Jacobson in Financial Services

March 11, 2005

Fee disclosure for super funds and managed investments

Regulations that set out a standardised template for superannuation and managed investment products to disclose fees and costs have been gazetted.

The Corporations Amendment Regulations 2005 (No. 1)
include an ASIC Fee Template, single-figure disclosure model and a consumer advisory warning box.

The new Rules commence on 1 July 2005.

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Posted 11th March 2005 by David Jacobson in Financial Services

March 5, 2005

International Financial Reporting and Capital Framework

APRA has issued information on 2 areas affecting the financial services industry:

1. Basle II Capital Framework: an article in the latest APRA Insight discusses the implementation of the new capital standards.

2. IFRS: APRA has released a paper dealing with the prudential implications of a number of specific
IFRS-related changes to Australian accounting standards. It is intended that the proposals will take effect from 1 January 2006.

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Posted 5th March 2005 by David Jacobson in Financial Services

February 27, 2005

Privacy case notes

The Federal Privacy Commissioner has published case notes 1 – 7, 2005.

The cases relate to excessive charges for access to records, a disputed credit file listing, inappropriate disclosure of personal information and a failure to appropriately secure documents when in transit.

The full decisions are worth reading to understand the Commissioner’s approach to complaints in different fact circumstances and how they are resolved.

In A v Insurer [2005] PrivCmrA 1 (http://www.privacy.gov.au/act/casenotes/ccn1_05.html),
the complainant asked an Insurer for copies of all his personal information that it held. After assessing the documents the Insurer quoted an access charge of approximately $600 to cover its costs for
retrieving and copying approximately 500 pages of documents. The complainant paid the charge and the Insurer provided the quoted documents, but withheld certain documents. The complainant alleged that
the Insurer failed to provide reasons for denying access to the withheld documents.

The Commissioner decided that:

* that the access charge was not excessive; and

* that the Insurer had breached National Privacy Principle 6.7 by not providing reasons for denying access to certain documents.

In B v Credit Provider [2005] PrivCmrA 2 (http://www.privacy.gov.au/act/casenotes/ccn2_05.html),
the complainant received a demand in January 2003 for payment of
outstanding telephone service charges covering a 12 month period up to
September 1996. The complainant claimed an invoice had been paid in
April 1996 and disputed owing further amounts.

In March 2003 the respondent listed a payment default in the amount of the debt on the complainant’s consumer credit information file, held by a credit reporting agency.

Following an investigation by the Commissioner, the credit reporting agency advised the respondent about the prohibition against listing statute barred debts, and the payment default listing was removed from the complainant’s consumer credit information file.

In C v Commonwealth Agency [2005] PrivCmrA 3 (http://www.privacy.gov.au/act/casenotes/ccn3_05.html),
the complainant and his wife were employees of the respondent. The complainant’s wife was the applicant in proceedings against the respondent in the Administrative Appeals Tribunal for compensation in relation to a health and safety issue. During proceedings the complainant’s wife submitted to the Tribunal that she was not able to afford certain medical expenses. In reply, the respondent obtained
information about the complainant’s income from its payroll department which it submitted to the Tribunal as evidence of the applicant’s financial standing.

The complainant argued that the respondent was not permitted to disclose his personal information to the respondent’s legal counsel in relation to a matter which did not concern the complainant.

The Commissioner decided under section 41(1)(a) of the Act not to investigate the matter further on the grounds that the disclosure of personal information was authorised by law and therefore did not breach National Privacy Principle 2.1.

In D v Health Service Provider; E v Health Service Provider; F v Health Service Provider; G v Health Service Provider [2005] PrivCmrA 4 (http://www.privacy.gov.au/act/casenotes/ccn4_05.html),
the Commissioner has published four case notes on four finalised complaints addressing a common issue, namely excessive charges for providing access. In 3 of the 4 cases the access fees were reduced.

In H v Commonwealth Agency [2005] PrivCmrA 5 (http://www.privacy.gov.au/act/casenotes/ccn5_05.html),
the complainant, a customer of a Commonwealth government agency, made a privacy complaint to that Commonwealth government agency about an officer of the agency improperly browsing her personal information. An investigation was conducted by the agency and as a result of the investigation the officer’s employment with the agency was terminated.

The Commissioner was of the opinion that based on the information supplied by the complainant the agency had dealt appropriately with the issue by terminating the officer’s employment and offering the complainant a written apology.

In I v Commonwealth Agency [2005] PrivCmrA 6 (http://www.privacy.gov.au/act/casenotes/ccn6_05.html),
the complainant alleged that a federal court had disclosed the complainant’s name and address to a third party. Following an investigation, the Commissioner decided that there was no jurisdiction to further investigate the allegation because the alleged disclosure involved information that was recorded in a court order and the alleged disclosure occurred in the course of the judicial functions and activities of the agency therefore it was not an act done, or practice engaged in, in respect of an administrative matter.

In J v Superannuation Provider [2005] PrivCmrA 7 (http://www.privacy.gov.au/act/casenotes/ccn7_05.html),
the complainant alleged that records relating to his superannuation disability claim were found on a public thoroughfare. The records included reports about covert surveillance undertaken by the superannuation provider as part of the claim assessment.

The Commissioner found there was a breach of National Privacy Principle 4.1 and then moved to conciliate a resolution of the matter. The parties agreed to resolution that included a formal written apology and a payment of compensation of $3500 for loss or damage including legal expenses and hurt and embarrassment. The superannuation provider also advised the Commissioner that it had changed its distribution policy to require that in future all couriered documents be signed for personally.

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Posted 27th February 2005 by David Jacobson in Privacy

February 25, 2005

More misleading advertising

Following on from my post last week on advertising, comes news of action by ASIC:

  ASIC has accepted an enforceable undertaking from Mortgage Point Pty Ltd (Mortgage Point) in response to its concerns that since October 2001, Mortgage Point, a Melbourne-based mortgage orginator, made potentially misleading and deceptive statements in its promotional brochures.
 Mortgage Point published various brochures in which it claimed to offer ‘independent’, ‘impartial’ and ‘unbiased’ advice about mortgages.
The brochures stated that Mortgage Point:

  • offers an impartial and unbiased loan advisory service;
  • gives free unbiased advice;
  • acts as an independent mortgage broker; and
  • provides independent advice.

ASIC formed the view that the claims were misleading and deceptive because Mortgage Point and its agents:

  • only receive commission from, and provide advice in relation to lenders on its panel; and
  • do not provide advice in relation to lenders who are not on its panel.

As part of the enforceable undertaking, which is provided under the consumer protection provisions of the ASIC Act, Mortgage Point has given an undertaking that:

  • it will not make any of the above claims or use the words ‘unbiased’, ‘impartial’ or ‘independent’ in any future advertising or promotional material;
  • it will provide compensation to any customer who has suffered loss as a result of relying on the claims Mortgage Point is ‘unbiased’, ‘impartial’ or ‘independent’;
  • it will implement a compliance program; and
  • it will make a financial contribution towards consumer education or similar programs. 

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Posted 25th February 2005 by David Jacobson in Financial Services

February 24, 2005

FSR review

Chris Pearce, the Parliamentary Secretary to the Treasurer has announced that he is " working on a series of proposed refinements that I believe will improve the operation of the legislation.

These refinements will be based on the feedback I have received from industry
  and consumer representatives, as well as from Treasury, ASIC and FSAC…

It is particularly important to ensure that any proposed changes reduce compliance
  costs for industry rather than impose further burdens."

"These areas include, by way of example, the application of the regime to telephone
  transactions, whether it can be streamlined to reduce costs in relation to ongoing
  advisory relationships and the extent to which it should apply to particular
  financial products or in particular situations."

 

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Posted 24th February 2005 by David Jacobson in Financial Services

February 18, 2005

Debentures

ASIC has released the results of an intensive surveillance of high-yield debentures that was conducted in late 2004.

ASIC examined the prospectuses and selected advertising for debentures issued by 11 companies that were offering high yields, such as interest rates that were four per cent per annum above bank term-deposit rates.

As a result of its surveillance, ASIC prevented four offers that failed to disclose information relevant to the fundraising from proceeding until the defects had been addressed. One of the four prospectuses required a final stop order, which permanently stopped the offer from proceeding.

ASIC also stopped two misleading advertising campaigns, and required companies to improve the information provided to investors in two other cases.

ASIC identified four common concerns that were especially prevalent, namely:

  • aggressive or misleading advertising
  • poor disclosure about property developments
  • related-party transactions, and
  • bad and doubtful debts.

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Posted 18th February 2005 by David Jacobson in Financial Services

Super fund choice

Employers affected by the choice of fund provisions will be
required to give a standard choice form to their existing employees before 29 July 2005, and within 28 days of commencing employment for new employees.

Employers will have two months to action employees’ choices and start paying contributions
into the choice fund, according to minutes of the ATO Business System Working Group
meeting
held in Sydney on 1 December 2004

Employees can choose a new complying fund; stay in the existing employer fund; or not make a choice, resulting in contributions going to the default fund identified in the standard choice form.

Failure to meet these obligations may attract the Super Guarantee charge. Employees can change funds once every 12 months (more often if employer allows it) and do not have to use the Standard Choice Form.

The ATO says employers will need to keep records for five years to show the choice requirements have been met and any additional documentation provided. However, the ATO notes there is no need to send standard choice forms to the ATO or the fund.

The Regulations for Choice of Fund are not expected to be finalised until March 2005. The regulations will cover the content of the standard choice form, information an employee choosing a fund must give their employer, the minimum level of life insurance to be offered by the default fund, exemptions where a trustee may provide benefits to employers.

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Posted 18th February 2005 by David Jacobson in Business Planning

February 15, 2005

Money laundering

New international anti-money laundering standards will oblige Australia to expand customer due diligence requirements for financial institutions and extend anti-money laundering obligations to non-financial businesses and professions such as real estate agents, dealers in precious metals and stones, accountants, trust and company service providers, legal professionals and notaries.

Existing account identification requirements will be strengthened and better record keeping will be required.

A new Bill is expected to be introduced into Parliament this year.


More
(PDF)

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Posted 15th February 2005 by David Jacobson in Anti-money laundering, Current Affairs, Financial Services

February 8, 2005

Changes to shareholder rights

The Parliamentary Secretary to the Treasurer, the Hon Chris Pearce MP says draft legislation released on 7 February will make it easier for shareholders to participate in corporate governance processes, while "striking a more appropriate balance between the
rights of different groups of shareholders".

He said the legislation would remove the "100-member rule" which currently requires
companies to hold special general meetings at the request of only 100 shareholders. A minimum of five per cent of total voting shares would be required to requisition a special general meeting.

Mr Pearce said a number of new proposals had been developed to enhance shareholders’ capacity to participate in scheduled meetings.

These proposals include:

  • making it easier for minority shareholders to place resolutions on the agenda of scheduled company meetings
  • requiring companies to distribute members’ statements along with notices of meetings
  • requiring proxy holders to vote in accordance with shareholder instructions. This would improve shareholder confidence in proxy voting by preventing the questionable practice of  "cherry-picking" proxies, whereby proxy holders lodge votes that accord with their own views while withholding contrary votes.

The proposals are contained in the Corporations Amendment Bill (No2) 2005. Submissions on the draft Bill will be accepted until 1 April 2005.

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Posted 8th February 2005 by David Jacobson in Corporate Governance
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