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May 28, 2012

ASIC credit relief report

In ASIC report 288, ASIC gives the following examples of recent credit relief decisions:

  • ASIC granted conditional licensing relief to a charitable body providing credit to its registered members. It granted this relief because it considered that, if relief were not granted, the costs of maintaining this service to registered members would be prohibitive and there was a potential consequence that the loan program would be withdrawn or the costs of the loans for registered members would be increased.
  • ASIC refused to grant relief from s144(1) of the National Credit Code, which prohibits the provision of credit to pay the premium on insurance taken out over mortgaged property for a period exceeding one year. It was not satisfied that the applicant had established that compliance with s144 was disproportionately burdensome to the regulatory benefits of compliance or that if relief were granted the potential for detriment to consumers would only be minimal.
  • ASIC refused relief to a number of credit licensees seeking to enable a person with less authority and responsibility to sign the annual compliance certificate (ACC) because it considered this to be contrary to the intention of the requirement.

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Posted 28th May 2012 by David Jacobson in legislation, licensing

May 23, 2012

COSL independent review released

The Credit Ombudsman Service Limited (COSL) has released an independent review of its operations against benchmarks prescribed by the Australian Securities and Investments Commission (ASIC) for EDR Schemes.

The review concludes that COSL meets most of the industry benchmarks and the requirements of ASIC’s RG.139 with a couple of areas where it did not think that the standard was quite met.

The review made 47 recommendations.

It concluded that COSL is not yet fully achieving the Fairness Benchmark. It noted that "Provided that COSL dedicates the necessary resources, it seems to us, however, that the Fairness issues that we have identified are capable of being quite readily addressed."

In this area it recommended that "COSL should develop more written guidance for its case managers to help them deal with common complaint scenarios, for example, allegations of excessive early termination fees or failure to provide accurate disclosure or to fulfil commitments about fees, interest rates or other matters etc. When undertaking this work, COSL should research other EDR scheme approaches and attempt to achieve a harmonised approach with FOS. Any differences in approach should be capable of clear explanation to consumers."

The review also commented on the question of competition as between the two remaining EDR schemes in the Australian financial sector, COSL and FOS:

"there is now substantial overlap with FOS and emerging contrasts between the approaches taken..... The scheme is less than one-tenth the scale of its competitor and has significantly less complaints experience. It will inevitably struggle to achieve the same level of in-house expertise, infrastructure, management professionalism, economies of scale, etc. This struggle will be much exacerbated if COSL is to accept members from all sectors of the financial industry."

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Posted 23rd May 2012 by David Jacobson in EDR

Langes Responsible Managers Seminars August 2012

Langes are pleased to announce that our next Responsible Manager seminars will be held in August 2012.

Our February seminars were well received. In response to feedback we will add an extra interactive session in addition to our case study.

These seminars for Australian Credit Licencees cover current hot topics and a general update on things you must get right.

Topics are selected for their relevance for Responsible Managers: the August seminars will specifically discuss preparing for an ASIC compliance audit.

It is a practical guide to the most recent changes and topical issues affecting financial services and credit licensees, including latest cases, legislation, regulatory developments and other tips on how to prove compliance.

Key Information

* Cost: $385 (incl GST) per person
* CPD points: 3 points
* Time: 9am – 12:30 noon (registration 8:30am)
* Location: Brisbane, Sydney, Melbourne, Adelaide
* Designed for: Responsible Managers who wish to stay up to date with all the relevant finance industry regulatory news

When and where
Brisbane: Tuesday 21 August 2012
Sydney: Wednesday 22 August 2012
Melbourne: Tuesday 28 August 2012
Adelaide: Wednesday 29 August 2012

Register your interest

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Posted 23rd May 2012 by David Jacobson in seminar

May 16, 2012

Bank exception fees class action update

The High Court has agreed that the appeal from the Federal Court decision in Andrews v ANZ Bank be removed to it and not be dealt with by the Federal Court Full Court. (Background)

This will speed up a decision on the characterisation of fees as a penalty.

Apart from ANZ Bank, class actions have also been issued against Citibank, Commonwealth Bank, NAB, Westpac, St George, BankSA and BankWest.

The four other banks against which proceedings are proposed to be issued are Bank of Queensland, Bendigo Bank, HSBC, and Suncorp.

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Posted 16th May 2012 by David Jacobson in responsible lending

FOS and COSL representation

ASIC is still reviewing its position on EDR schemes jurisdiction over complaints when credit providers have commenced debt recovery proceedings.

It is important that disputes that are referred to FOS or COSL be dealt with properly at an early stage to avoid drawn out proceedings.

Langes offers assistance in 2 key areas, firstly drafting a comprehensive response by credit providers to borrowers' claims and secondly in representing credit providers at conciliation conferences.

Contact Shannon Adams.

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Posted 16th May 2012 by David Jacobson in EDR