Issue 818, 10 August 2021
In this issue:
- Amendments to the Design and Distribution Obligations (DDO): ASIC consultation
- Royal Commission implementation: consultation on ‘single disciplinary body’ reform
- APRA Connect: ‘go-live’ information
Amendments to the Design and Distribution Obligations (DDO): ASIC consultation
Treasury has released a statement setting out the Government’s intention to make amendments to the application of the design and distribution obligations (DDO).
To provide certainty on the application of the DDO regime in the period prior to the Government making the amendments listed in the statement, ASIC is currently considering making interim amendments consistent with the Government’s stated policy intention, using its modification and exemption powers under section 994L of the Corporations Act 2001 (Corporations Act).
ASIC proposes to give effect to these interim amendments via legislative instrument:
- amending section 761G of the Corporations Act to clarify that the retail and wholesale client definitions apply to Part 7.8A of the Corporations Act
- exempting products from DDO where these products are within scope of the DDO only as non-cash payment facilities; subject to exclusions for debit cards and stored value facilities from that exemption
- exempting foreign cash settled immediately from the DDO regime
- excluding margin lending facilities provided to non-natural persons from the operation of the DDO regime
- amending the meaning of ‘product distributor’ under the ASIC Corporations (Basic Deposit and General Insurance Product Distribution) Instrument 2015/682 to clarify that employees of licensees are not subject to their own separate set of DDO obligations
- amending ASIC Class Order [CO 14/1262] so that the application of DDO extends to 31-day term deposits.
ASIC is currently seeking comment on the legislative instrument.
If you have any feedback you would like ASFA to consider for inclusion in our submission responding to ASIC’s proposed legislative instrument, please contact Maggie Kaczmarska by close of business Friday 20 August.
Royal Commission implementation: consultation on ‘single disciplinary body’ reform
Treasury has released a policy paper seeking input on aspects of regulations to support the Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Bill 2021.
That Bill was introduced as part of the Government’s response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, and seeks to:
- expand the role of the Financial Services and Credit Panel within ASIC to operate as the single disciplinary body for financial advisers
- create additional penalties and sanctions for financial advisers who have breached their obligations under the Corporations Act 2001, reflecting that the current set of sanctions are limited to banning a financial adviser
- introduce a new registration system for financial advisers to improve the accountability and transparency of the financial services sector
- transfer functions from the Financial Adviser Standards and Ethics Authority (FASEA) to the Minister responsible for administering the Corporations Act and to ASIC to streamline the regulation of financial advisers.
The Bill has been passed by the House of Representatives and is currently before the Senate (see ASFA Action issues 817 and 811 for background).
The policy paper released by Treasury seeks feedback on specific elements in relation to the single disciplinary body reforms:
- the circumstances when ASIC must convene a Financial Services and Credit Panel to consider alleged financial adviser misconduct
- the types of administrative sanctions made against a financial adviser that must be included on the Financial Advisers Register.
Feedback on the paper will be used to inform the development of exposure draft regulations which will be released later this year for further consultation. The Government intends that the finalised regulations will come into force on 1 January (subject to passage of the Bill).
Treasury is seeking submissions on the policy paper by Friday 20 August, to SDBconsultation@treasury.gov.au.
APRA Connect: ‘go-live’ information
As reported in recent ASFA Actions, APRA will launch its new data collection tool, APRA Connect, on 13 September. The first regulatory data collection to be introduced in APRA Connect will be those implemented under phase 1 of the Superannuation Data Transformation project.
APRA has released further information to help regulated entities prepare for APRA Connect. APRA has noted that all regulated entities “now need to prepare for APRA Connect production go-live and nominate their initial Regulatory Reporting Administrator” via a specific form in the current reporting system, Direct to APRA (D2A): RRA_PROD: APRA Connect nomination for 13 September go-live, in readiness for production.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
