Australian Regulatory Compliance Review

Australian Consumer Law update: deferral to 1 July 2010 and other amendments

The Trade Practices Amendment (Australian Consumer Law) Bill 2009 has been introduced into the Senate.

The Government has tabled amendments proposing that the provisions concerning the national unfair contract terms law will not commence before 1 July 2010.

Other proposed amendments to the unfair contract terms provisions:

• provide that a term in a consumer contract can only be unfair if it would cause financial or non-financial detriment to a party;
• remove the consideration of whether a term would cause detriment, or a substantial likelihood thereof, from the considerations that a Court must have regard to in determining whether a term of a consumer contract is unfair;
• remove the power for the Minister to prohibit terms by regulation;
• provide that the Minister must take into account certain factors in prescribing by regulation an example of an unfair term;
• clarify that the unfair contract terms provisions apply to consumer contract terms varied on or after commencement as varied.

Bankruptcy Amendment Bill introduced

The Attorney-General, Robert McClelland,has introduced the Bankruptcy Legislation Amendment Bill 2009 into Parliament.

The Bill introduces a number of reforms, including:

• increasing the minimum amount for which a creditor can petition for bankruptcy from $2,000 to $10,000;
• increasing the stay period from when a declaration of intent to file a debtor’s petition is filed to when a creditor may commence action to recover debts from seven to 28 days;
• increasing the income, asset and debt thresholds to allow more people in financial distress to enter into voluntary debt agreements;
• introducing a more efficient and transparent process for fixing and reviewing trustee remuneration;
• strengthening the penalties for some offences, particularly those involving fraud; and enhancing powers for the Inspector-General in Bankruptcy to investigate possible offences.

Privacy of personal information online

Shortly after the Government's response to the Australian Law Reform Commission's Privacy Report. ACMA released its research report Attitudes towards use of personal information online.

Key findings include:

• There was an acceptance among research participants that using information and communication technologies means sharing personal information. The type of, and level to which, personal information is disclosed is seen to be within an individual’s control and a matter of personal choice.
• Users made informed decisions about the risks of disclosing personal information based on the context of their interactions, with two types of situations:
  - transaction provision – disclosure of information necessary to obtain a good or service, e.g. internet banking, online shopping, eBay; and
  - networking or social provision – where information disclosure is made within an online community to share or exchange opinions, beliefs and personal details, e.g. Facebook.

Respondents saw a distinction depending on nature of information users are providing. In the case of information provided in the course of transactions, a service provider such as a bank was expected to provide good security, whereas on social networking sites where the service provider is merely hosting the content, security breaches are accepted.

• Participants on the whole were generally well informed about both risks to their online privacy and strategies to protect their personal information. However, there was a widespread perception that breaches are inevitable, resulting in an accepting attitude towards their ability to fully protect their personal information online.
• Risks identified included identity theft, threat to personal safety, invasion of privacy, unwanted communications such as spam, financial loss, fraud and damage to reputation. Severity of these risks was assessed taking into account perceived likelihood of the information being misused and the severity of consequences.

Interestingly the Government's response to the Privacy Report only briefly dealt with the impact of technology on privacy: issues such as radio frequency identification (RFID), biometric systems and data matching will be left to guidelines, the internet was mentioned in passing and a recommendation about electronic health records was accepted in principle. Identity theft was only discussed in the context of credit. 

Draft AML/CTF Rules for the exemption of salary packaging administration

Austrac has released draft AML/CTF Rules exempting providers of administration services relating to salary packaging from the Act where their activities relate solely to the item 6, item 7 and item 48 designated services.

A public consultation period is open from 27 October 2009 to 10 November 2009.

Do Not Call Register review discussion paper

The Government has released a Discussion Paper reviewing the Do Not Call Register Act which allows Australians to opt out of receiving unsolicited commercial marketing (telemarketing) calls by listing their fixed line and mobile telephone numbers used primarily for private or domestic purposes.

The Discussion Paper does not deal with the Government's announced intention to expand the Register to include business numbers.

It invites comments on the operation of the Register and key elements of the legislation and discussion of options including :

• the opt-out mechanism
• the definition of consent
• the length of the registration period
• exemptions
• research calls

The closing date for submissions is 4 November 2009.

Director and executive termination benefits update

The Corporations Amendment (Improving Accountability on Termination Payments) Bill 2009 (see background here) has been passed by the Senate with one amendment: a clause that the law ceases if not extended by Parliament after 3 years.

The House of Representatives will now consider the amendment made by the Senate.

UPDATE 30 October: On 29 October the House of Representatives disagreed to the Senate amendment.

Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009 passed

The Corporations Legislation Amendment (Financial Services Modernisation) Bill 2009 has been passed by both the House of Representatives and the Senate.

Amongst other things the Bill amends the Corporations Act 2001 to:

• establish a national regulatory regime for margin loans ;
• require that promissory notes valued at $50,000 or over are subject to the same regulatory regime as debentures;
• require the establishment of a public register of debenture trustees.

It is now awaiting assent.

Updated compensation and insurance arrangements for AFS licensees

ASIC has released an updated version of Regulatory Guide 126 Compensation and insurance arrangements for AFS licensees (RG 126).

ASIC has removed the requirement for Australian Financial Services (AFS) licensees to obtain automatic insurance run-off cover as it is not available to AFS licensees in the current insurance market.

The changes mean that:

• until 31 December 2009 – adequate PI insurance is based on what is available in the market now, provided it meets the minimum requirements outlined in Section C of RG 126; and
• from 1 January 2010 – in addition to the above, AFS licensees are required to obtain switching cover that covers the situation where an AFS licensee moves a client from a product that is not on the approved product list to one that is on the approved product list.

The revised version of RG 126 also clarifies that fraud cover is not required for licensees who are sole traders.

Key credit reporting change dates

As part of the Government's proposed changes to the Privacy Act (see here) 4 additional categories of information ("data sets")(see here) as well as repayment history information will be permitted to be included in credit reports.

The Government has announced the following key dates for implementation:

• The exposure draft of the amendments will be released in early 2010 for further consultation;
• the listing of the four data sets with credit reporting agencies will be permitted to occur in relation to existing accounts open at the time that the amendments to the Privacy Act take effect;
• The Government will consult with stakeholders on whether the ‘plus four’ data sets should be shared prior to the commencement of repayment history disclosure;
• the period from when repayment history may be reported will commence from 14 April 2010;
• the commencement of provisions about the use and disclosure of repayment history information will be subject to the same commencement date as the full responsible lending obligations in the National Consumer Credit Protection Act (1 January 2011).

ACCC trade practices compliance update

ACCC Enforcement Commissioner Sarah Court's speech on compliance provides a number of reasons why compliance, especially voluntary compliance, makes good sense for any business. Highlighting a number of case studies, she provides some guidance on how the ACCC may react to certain breaches: will it litigate, accept a court enforceable undertaking or resolve the matter administratively?