Here’s the Agenda for our next meeting on 24 February:

1.    Are you prepared for the new National Consumer Credit regime?

a)    Reviewing Langes NCC Compliance Checklist

b)   ASIC Credit Guidance Registration and Licensing requirements

c)    New form of default notices

2.   Other items for discussion

a)    Personal Property Securities update

b)   Guarantee Scheme for Large Deposits and Wholesale Funding to end.

c)    Financial Claims Scheme– requirement for disclosure in PDS.

d)   Reminder: AUSTRAC 2009 AML/CTF compliance reporting dates –independent reviews?

Members can download slides now from the LCAP website.

The Fair Work Act  now governs employment, with the new Banking, Finance and Insurance Award  replacing the Credit Union and other financial services awards as of 1 January .

With the new National Employment Standards also applying from 1 January there are some important changes now in place .

We recommend a review to identify inconsistencies between the new award and the National Employment Standards in:

1. your letters or offers of employment.

2. employment contracts ( new and existing )

3. existing policies.

There may also be a need to develop new policies and procedures eg letters responding to flexible work requests.

You should also review your existing policies relating to probation, parental leave, work-life balance and performance and misconduct.

Do your employment contracts include the new mandatory terms?

Have you drafted complying termination and redundancy pro forma letters?

Have you reviewed your leave forms, time sheets and pay slips to ensure they comply with new requirements in terms of content and retention periods.

If you need assistance, call Richard Farago.

It is becoming common for financial institutions to assign parcels of loans to each other.

But is the assignment effective?

It will depend on the terms of the loan agreements being assigned, the terms of the transfer and the assignment process.

And any enforcement rights exercised by the transferee will be restricted by the terms of the loan agreements.

In Goodridge v Macquarie Bank Limited [2010] FCA 67 Judge Rares of the Federal Court decided that one borrower’s loan which was part of a complex transfer of about 18,500 margin loans for nearly $1.5 billion from Macquarie Bank to (ultimately) Leveraged Equities Limited (part of the Bendigo and Adelaide Bank) was not validly assigned.

The borrower had sued for return of his investments which were forcibly sold as the result of a margin call.

After examining the specific circumstances Judge Rares decided that:

• the borrower had not in fact been in default,
• the demands were not made in accordance with the loan agreement,
• there was no power to sell the borrower’s investments,
• the sales were in breach of the loan agreement, and
• the investments should be returned to the borrower and he should be compensated for any loss after payment of his liabilities.

As well as deciding there was no valid assignment, the Judge decided that no proper notice of the assignment had been given and that Leveraged Equities had acted unconscionably.

The new threshold is $374,330 (up from $354,530) . The next change will be on 10 March 2010.

Further information is available at Hardship Threshold.

From 1 July 2010 (when the National Credit Law starts) the threshold will be fixed at $500,000.

The Government has announced that the Guarantee Scheme for large deposits over $1M will close to new liabilities from 31 March 2010.

Deposits covered by the Guarantee Scheme on 31 March 2010 (the Final Issuance Date) will continue to be covered for their term (up to five years), and for a period of up to 67 months from the Final Application Date (24 March 2010) in the case of at call deposits.

Depositors will not be able to increase the guaranteed amount above their closing balance on the Final Issuance Date. Any increase (including interest) to the balances of guaranteed accounts above their closing balances on the Final Issuance Date cannot be guaranteed.

Guarantee Scheme fees will continue to apply throughout the period for which the guarantee applies to the respective deposits.

The Financial Claims Scheme will continue to provide a free guarantee of deposits up to and including $1 million.

Although the USA has its own special political and economic issues, it is worth noting how President Obama has responded to the latest round of bank executive bonuses by firstly proposing to limit the banks’ ability to own, invest in or sponsor a hedge fund or a private equity fund and secondly to limit the consolidation of the financial sector.

The President’s comments are worth reading in full here. They are very emotional ending with:

So if these folks want a fight, it’s a fight I’m ready to have. And my resolve is only strengthened when I see a return to old practices at some of the very firms fighting reform; and when I see soaring profits and obscene bonuses at some of the very firms claiming that they can’t lend more to small business, they can’t keep credit card rates low, they can’t pay a fee to refund taxpayers for the bailout without passing on the cost to shareholders or customers — that’s the claims they’re making. It’s exactly this kind of irresponsibility that makes clear reform is necessary.

We’ve come through a terrible crisis. The American people have paid a very high price. We simply cannot return to business as usual. That’s why we’re going to ensure that Wall Street pays back the American people for the bailout. That’s why we’re going to rein in the excess and abuse that nearly brought down our financial system. That’s why we’re going to pass these reforms into law.

The Australian Government is currently deciding on its response to the Productivity Commission Report on Executive Remuneration and it will be interesting to see whether it adopts similar language.

Listen to BBC Business Daily report.

Langes has drafted a Remuneration Committee Charter and Remuneration Policy to comply with the amendments to APRA APS 510. LCAP members can download the documents here.

The new threshold is $354,530 (down from $364,100). The next change will be on 10 February 2010.

Further information is available at Hardship Threshold.

From 1 July 2010 (when the National Credit Law starts) the threshold will be fixed at $500,000.

The Fair Work Act requires employers to collectively bargain with employees where a majority of employees want this, and to do so in “good faith”.

When a bargaining process commences (which can happen at any time) an employer is required, within 14 days, to provide each employee with a notice of the right to be represented by a bargaining representative. This may be anyone (including a union, provided they are entitled to represent the employee in that particular role). Employers cannot refuse or deny to recognise a valid bargaining representative.

If an employer isn’t prepared to bargain, a bargaining representative can apply to Fair Work Australia for a determination that a majority of “employees” wish to bargain with the employer. FWA may then make orders to this effect.

“Good faith” bargaining, includes:

• Attending and participating in meetings at reasonable times;
• Disclosing all relevant and non-confidential information in a timely manner;
• Responding and giving genuine consideration to proposals and reasons for responses to those proposals; and
• Refraining from “capricious and unfair” conduct that undermines freedom of association or collective bargaining.

Any agreement reached in a collective bargain must meet the BOOT (Better Off Overall Test) according to FWA, and comes into effect seven days after its approval is received.

Langes has experience dealing with the Finance Sector Union and can assist with negotiations.

Implementation of the credit reform changes will fall into 2 categories: firstly, registration and licensing and secondly, your credit procedures and documents.

We suggest you set up a project committee if you haven’t already done so.

We will be providing general support through our Compliance Assurance Program and customised support as you require.

We have a dedicated consumer credit reform website here which features a preparation checklist.

You can subscribe for updates here.