ASIC issues policy guidance on margin lending licensing

ASIC has released policy and regulatory guidance to assist issuers and advisers of margin lending facilities comply with new licensing, conduct and disclosure requirements, following the passage of the Corporations Legislation Amendment (Financial Modernisation) Act 2009 (the Act).

The Act, amongst other things, makes margin lending facilities a financial product and requires that issuers and advisers of margin lending facilities hold an Australian Financial Services Licence (AFSL).

In addition, the regime imposes new responsible lending requirements on issuers of margin lending facilities and clarifies responsibility for providing notification of margin calls.

Under the Act, issuers and advisers will have a 12-month transition period from commencement of the Act until the new requirements take effect (commencement of the relevant sections have not yet been proclaimed). During the first six months of the transition period, existing margin lenders and advisers of margin loans will be required to apply for an AFSL authorisation.

A number of ASIC's existing regulatory guides have been amended to take into account the inclusion of margin lending facilities as a financial product.

The updated policy and regulatory guidance comprise:

Posted by davidjacobson on December 7, 2009 in Corporations Act, Financial Services | Permalink | Comments (0)

Fair Work Information Statement

From 1 January 2010, all employers covered by the national workplace relations system have an obligation to give each new employee a Fair Work Information Statement before, or as soon as possible after, the employee starts employment.

The right for new employees to receive the Statement is one of 10 minimum standards in the National Employment Standards (NES) that apply to employment of employees. Together with modern awards, the NES is a key feature of the national workplace relations system from 1 January 2010.

The Statement contains information about:

  • the National Employment Standards (NES)
  • the effect on an employee’s NES entitlements when there is a transfer of business
  • modern awards
  • agreement making under the Fair Work Act 2009
  • individual flexibility arrangements
  • the right to freedom of association
  • termination of employment
  • right of entry (including the protection of personal information by privacy laws)
  • the role of the Fair Work Ombudsman and Fair Work Australia

Posted by davidjacobson on December 6, 2009 in Workplace | Permalink | Comments (0)

Reforming statutory warranties

Treasury has released the Commonwealth Consumer Affairs Advisory Council (CCAAC) report Consumer rights: Reforming statutory implied conditions and warranties.

It is part of the Australian Consumer Law review.

Posted by davidjacobson on December 6, 2009 in Trade Practices | Permalink | Comments (0)

Langes news for mobile devices

You can now view Langes compliance news headlines optimised for mobile devices here.

Posted by davidjacobson on December 6, 2009 in Compliance, Web/Tech | Permalink | Comments (0)

Companies limited by guarantee: draft Corporations Amendment (Corporate Reporting Reform) Bill 2010 released

The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP,has released the draft Corporations Amendment (Corporate Reporting Reform) Bill 2010 and the accompanying Regulations for comment.

Companies limited by guarantee

The main change affects Australia's 11,000 companies limited by guarantee, many of which are sports and recreation related organisations, community service organisations, education-related institutions and religious organisations.

A three tiered differential reporting framework will be introduced exempting small companies limited by guarantee from reporting and auditing requirements and providing other companies limited by guarantee with streamlined assurance requirements and simplified disclosures in the directors’ report. In addition, the process for companies to distribute the annual report to their members will be streamlined.

Companies limited by guarantee will be prohibited from paying a dividend, as the government believes the corporate structure of companies limited by guarantee means that they are not suited for conducting for-profit activities which could legitimately warrant the payment of dividends to members.

Under the first tier, companies would be exempt from preparing the financial report and the directors’ report. This tier comprises of companies limited by guarantee with annual revenue less than $250,000 which do not have deductible gift recipient status.

Under the second tier, companies would:

  • prepare a financial report, which they could elect to have reviewed rather than audited;
  • prepare a streamlined directors’ report, rather than a full director’s report; and
  • be subject to a streamlined process for distributing the annual report to members.

The second tier comprises of the following companies limited by guarantee:

  • companies with an annual revenue of less than $250,000 that are a deductible gift recipient; and
  • companies with an annual revenue of $250,000 or more but less than $1 million, irrespective of whether the company is a deductible gift recipient.

Under the third tier, companies would:

  • continue to prepare an audited financial report;
  • prepare a streamlined directors’ report, rather than a full director’s report; and
  • be subject to a streamlined process for distributing the annual report to members.
  • The third tier comprises of companies limited by guarantee with an annual revenue of $1 million or more, irrespective of whether the company is a deductible gift recipient.

Other changes

The other key measures include:

  • streamlining parent-entity reporting;
  • providing greater flexibility for companies to pay dividends, by replacing the profits test with a solvency-type test; and
  • allowing companies to more easily change their year-end date.

The reforms will also implement refinements to the regulatory framework, including:

  • improving disclosure of non-financial information in the directors' report;
  • protecting solicitors' representation letters from disclosure to enable auditors to properly verify a company's contingent liabilities;
  • refining the statement of compliance with International Financial Reporting Standards contained in the directors' declaration; and
  • clarifying the circumstances in which a company can cancel its share capital.

The closing date for submissions is 3 February 2010.

Posted by davidjacobson on December 4, 2009 in Compliance, Corporations Act | Permalink | Comments (0)

Fair Work Act amendment passed

The Fair Work Amendment (State Referrals and Other Measures) Bill 2009 has been passed by both Houses of Parliament .

Assent is expected before commencement on 1 January 2010.

The amendment will extend coverage of the Fair Work Act to unincorporated private sector businesses, charities and State Government bodies.

Posted by davidjacobson on December 3, 2009 in Workplace | Permalink | Comments (0)

Draft bill for ASIC supervision of financial markets

Treasury has released for comment an exposure draft Corporations Amendment (Financial Market Supervision) Bill 2009 containing proposed changes to the Corporations Act 2001 providing for ASIC to supervise domestically licensed financial markets, creating a new rule making power for ASIC and providing additional powers for ASIC to enforce these rules.

Comments close on 24 December 2009.

Posted by davidjacobson on December 2, 2009 in Corporations Act, Financial Services | Permalink | Comments (0)

Citigroup responds to ASIC consumer credit insurance concerns

Citigroup Pty Ltd (‘Citigroup’) has responded to ASIC concerns that some telephone sales of consumer credit insurance products between August 2008 and January 2009 may have been misleading, or likely to mislead consumers.

Citigroup received complaints from customers about the sale and promotion of its consumer credit insurance products known as ‘CreditShield’ and ‘CreditShield Plus’ (together known as ‘Creditshield’). Citigroup was selling Creditshield during calls placed by cardholders to activate new or replacement credit cards (‘activation calls’).

Of the total complaints Citigroup received, 174 cardholders complained about selling practices. In addition, a large number of cardholders cancelled their Creditshield policies during this period.

ASIC reviewed randomly selected recordings of direct marketing calls selected from Citigroup’s complaints register.

ASIC’s review of the activation calls revealed the following issues:

  • The sale of Creditshield to cardholders who had not agreed to purchase it
  • The use of potentially misleading or ambiguous phrases by Citigroup during the activation calls
  • Telephone operators persisting with selling Creditshield to callers, despite the cardholder saying ‘No’ more than once – on some occasions in calls reviewed by ASIC, the cardholder said ‘No’ on three or more occasions.
  • The practice of telephone operators to keep cardholders ‘captive’ on the telephone call by waiting to tell cardholders that their credit cards had been activated only after Creditshield sales (or attempted sales) had been completed.

Prior to ASIC raising its concerns with Citigroup, Citigroup had already acted to terminate some telephone sales agents.

In order to address ASIC’s concerns and resolve the issues identified, Citigroup has implemented a number of changes to the calling script for its telephone operators.

Some of the changes include the following:

  • The initial purpose of the call (the card activation) is concluded before cardholders are asked if they wish to hear about another product (such as Creditshield);
  • Words such as ‘enrol’ and ‘activate’ have been replaced by ‘purchase’ when operators are referring to Creditshield;
  • The provision of a general advice warning at the commencement of the call;
  • The removal of representations regarding Creditshield being ‘free if you have paid your bills’; and
  • The introduction of a clear approach to handling customer objections during Creditshield telephone sales.

Citigroup is also now in the process of writing to all customers (other than those that have already made a claim on their policies) who purchased Creditshield while activating their card between August 2008 and January 2009 to ensure that they are aware that they purchased Creditshield, and that they are aware of Creditshield’s terms and conditions.

Customers who believe they were not made aware of their purchase of Creditshield or its terms and conditions are being asked to contact Citigroup in order for Citigroup to promptly address and resolve customers’ concerns including potentially refunding affected customers in the appropriate circumstances.

Posted by davidjacobson on December 2, 2009 in Financial Services, Insurance, Marketing | Permalink | Comments (0)

Austrac 2009 AML/CTF compliance reporting dates

Austrac has announced that compliance reports for 2009 business activities must be lodged between 1 January and 31 March 2010. These reports will reflect business activities from 1 January to 31 December 2009 and should be lodged through AUSTRAC's internet-based system, AUSTRAC Online.

The 2009 AML/CTF compliance report asks reporting entities to answer questions relating to four broad topics:

  • AML/CTF programs – Part A (the identification, management and reduction of the risk of money laundering and terrorism financing faced by a reporting entity)
  • AML/CTF programs – Part B (customer identification procedures)
  • ongoing customer due diligence and reporting requirements
  • correspondent banking relationships and electronic funds transfer instructions.

Banks and other lenders, non-banking financial service providers, and gambling, bullion and money service businesses covered by the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 are required to submit these reports.

Posted by davidjacobson on December 2, 2009 in Anti-money laundering | Permalink | Comments (0)

Corporations Act update

ComLaw has published a consolidated Corporations Act 2001 incorporating the amendments made by the Corporations Amendment (Improving Accountability on Termination Payments) Act 2009.

Posted by davidjacobson on December 2, 2009 in Corporations Act | Permalink | Comments (0)