Australia
On 11 October 2024, the Australian Securities and Investments Commission (ASIC) issued an update on its licencing and professional registration activities to assist current and prospective Australian Financial Services (AFS) and credit licencees understand the licencing regime. Report 797 Licensing and professional registration activities: 2024 update (REP 797) provides the latest information on registration and licence applications from the 2023-24 financial year and key changes to licencing processes. For more information, please click here.
On 15 October 2024, ASIC issued an investor alert to warn investors to be on high alert following a significant increase in reports of stolen shares since August 2024 from people who have had their personal identity compromised. Fraudsters are impersonating individuals and stealing their shares, with many victims unaware their shares have been transferred or sold until they receive a confirmation letter in the mail from a share registry or the Clearing House Electronic Subregister System (CHESS). Australians previously affected by data breaches should be particularly alert to the increased likelihood of identity theft, given the availability of their personal information online. For more information, please click here.
On 21 October 2024, the ASIC Derivative Transaction Rules (Reporting) 2024 (2024 Reporting Rules) will commence, replacing the ASIC Derivative Transaction Rules (Reporting) 2022. The 2024 Reporting Rules introduce changes to align with international reporting standards, consolidate transitional provisions and exemptions, and ensure reporting requirements are fit for purpose. These changes will greatly enhance the conformity and consistency of OTC derivative transaction data and ultimately improve its quality and useability for a range of regulatory purposes. For more information, please click here.
On 21 October 2024, ASIC announced its proposed updates to RG 51 Applications for relief and RG 108 No-action letters. ASIC is updating RG 51 and RG 108 to reflect its current regulatory approaches to both applications for relief and no-action letters, to incorporate relevant additional guidance and amend outdated references. ASIC is not proposing to make significant changes to the factors that it considers when assessing applications. ASIC is seeking feedback on the proposed updates. Submissions should be sent to the designated email address by 5pm on 18 November 2024. For more information, please click here.
On 23 October 2024, ASIC announced that it will host a webinar on 13 November 2024 to provide practical guidance to AFS licencees and financial advisers (relevant providers) to assist the industry with the application of the qualifications standard, particularly to existing providers. The webinar will include a practical walkthrough of how to assess a person’s qualifications against the requirements, and how to input qualifications information into the Financial Advisers Register. Interested parties should register by following the designated registration link. For more information, please click here.
On 24 October 2024, ASIC released updated regulatory guidance for the resignation, removal and replacement of auditors. The updates to Regulatory Guide 26 Resignation, removal and replacement of auditors (RG 26) reflect expanded obligations applying in relation to Registrable Superannuation Entities (RSEs) and Retail Corporate Collective Investment Vehicles (retail CCIVs). Among the revisions to RG 26 is guidance on how ASIC may exercise powers to give consent to the resignation or removal of an auditor of an RSE or retail CCIV, information required for resignation and removal applications, and relevant effective dates. For more information, please click here.
On 29 October 2024, ASIC reminded financial services and credit licencees to ensure their governance practices keep pace with their accelerating adoption of artificial intelligence (AI). This reminder follows ASIC’s first state of the market review of the use and adoption of AI by 23 licencees, which found potential for governance to lag behind AI adoption, despite current AI use being relatively cautious. ASIC’s findings revealed nearly half of licencees did not have policies in place that considered consumer fairness or bias, and even fewer had policies governing the disclosure of AI use to consumers. For more information, please click here.
On 29 October 2024, ASIC released the full programme for the ASIC Annual Forum and dinner to be held on 14 – 15 November 2024 in Sydney. The event brings together leading business, regulatory and consumer representatives to consider the financial challenges that impact the Australian nation under the theme Bridging generations: Regulating for all Australians. Registrations for the Forum are open until 7 November 2024 if not sold out before. Group discounts are available. Dinner registrations are fully booked, with a waitlist available. For more information, please click here.
On 30 October 2024, ASIC released findings from its financial reporting and audit surveillance for the 12 months to 30 June 2024, and announced a proactive surveillance focused on auditors’ compliance with independence and conflicts of interest requirements. Report 799 ASIC’s oversight of financial reporting and audit 2023–24 (REP 799) outlines findings related to disclosure of material business risks in the operating and financial review, impairment of assets, revenue recognition and other financial report disclosures from 1 July 2023 to 30 June 2024. For more information, please click here.
On 31 October 2024, ASIC released its third publication on information lodged under the reportable situations’ regime. The publication provides high-level insights into reporting trends from 1 July 2023 to 30 June 2024. The publication covers licencee population reporting, breach identification and investigation, root causes, consumer impact and remediation efforts. For more information, please click here.
Enforcement
On 9 October 2024, ASIC announced the cancellation of the Australian credit licence of Ferratum Australia Pty Ltd (in liquidation) following a payment of compensation by the Compensation Scheme of Last Resort (CSLR). On 30 April 2024, the Australian Financial Complaints Authority (AFCA) made a determination against Ferratum, which Ferratum failed to pay. Subsequently, on 18 September 2024, the CSLR paid $1,297.00 to a person for the AFCA determination and notified ASIC. As a result, on 4 October 2024, ASIC cancelled Ferratum’s credit licence. Under the regulations, when the CSLR pays compensation to an eligible consumer in relation to an AFCA determination and notifies ASIC of the details of the firm that failed to pay the compensation, ASIC must cancel the AFS licence or credit licence of the firm. For more information, please click here.
On 9 October 2024, ASIC announced the ban of financial adviser John Hazell from providing financial services for a period of two years. Mr Hazell was an authorised representative of Richmond Partners Pty Ltd from 1 March 2018 to 16 May 2024. Mr Hazell was registered with the Tax Practitioners Board (TPB) as a tax (financial) adviser on 15 June 2015 until his registration was terminated by the Board effective 8 March 2023 for ceasing to meet registration requirements. In his dealings with the TPB, ASIC identified Mr Hazell had made misleading statements in order to retain his registration, and he continued to provide professional services to retail clients when he was unable to manage his own financial tax affairs and failed to reasonably engage with a professional body when conduct concerns were identified. As a result of these concerns ASIC found that Mr Hazell is likely to contravene his obligations as a financial adviser and in the interests of consumer protection, imposed a banning period of two years. For more information, please click here.
On 11 October 2024, ASIC announced the cancellation of 2 AFS licences and 11 Australian credit licences (collectively, the Licencees). The Licencees were required by law to be a member of the AFCA. AFCA membership gives consumers access to a free, fair and independent dispute resolution scheme if a complaint cannot be resolved internally by a Licencee. ASIC works with AFCA to identify AFS licence and credit licence holders that do not comply with their obligation to maintain their AFCA membership. If an entity is expelled from the scheme or requests to withdraw membership, AFCA must notify ASIC. Where an entity fails to comply, or is otherwise in breach of general conduct obligations, ASIC will continue to take action to cancel AFS licence or credit licences. For more information, please click here.
On 21 October 2024, ASIC announced the suspension of credit licencee Peter Wormington for a period of four months and the cancellation of the Australian credit licence of Emmanuel Katsoulis. Mr Wormington had been expelled from the AFCA due to non-payment of fees and has failed to pay industry funding levies owed to ASIC. Mr Katsoulis failed to lodge various Annual Compliance Certificates (ACCs) and had failed to pay industry funding levies owed to ASIC. For more information, please click here.
On 22 October 2024, ASIC announced that the ex-CEO of ACCE Australia Pty Ltd (ACCE), Grant Colthup, appeared in the Magistrates Court at Ipswich charged with one count of fraud contrary to section 408C of the Criminal Code 1899 (QLD) following an ASIC investigation in connection with a $2.2 million cryptocurrency transaction in July 2022. Between May 2019 and September 2022 ACCE operated a digital asset exchange platform and offered cryptocurrency trading services to customers under the name “Mine Digital.” ASIC alleges that a customer of Mine Digital paid $2.2 million to ACCE for Bitcoin and never received any cryptocurrency in exchange. ASIC alleges that Colthup used the funds to pay liabilities of ACCE and/or purchase cryptocurrency for others. For more information, please click here.
On 22 October 2024, ASIC announced the cancellation of the AFS licence and Australian credit licence of Ultiqa Lifestyle Promotions Limited (in liquidation) following the payment of compensation by the CSLR. On 28 June 2024, the AFCA made a determination against Ultiqa, which Ultiqa failed to pay. Subsequently, on 2 October 2024, the CSLR paid $19,429.60 to a person for AFCA’s determination and notified ASIC. As a result, ASIC cancelled Ultiqa’s AFS and credit licences on 16 October 2024. Where the CSLR pays compensation to an eligible consumer in relation to an AFCA determination and notifies ASIC of the details of the firm that failed to pay the compensation, ASIC must cancel the Australian financial services licence and credit licence of the firm. For more information, please click here.
On 23 October 2024, ASIC announced the commencement of court proceedings alleging QBE Insurance (Australia) Limited (QBE) misled customers about the value of discounts offered on certain general insurance products. Between July 2017 and September 2022, QBE made statements and sent renewal notices promising discounts on premiums for a range of general insurance products, including home, contents and car insurance. ASIC alleges QBE’s pricing model potentially eroded the discounts received by over half a million customers, in some cases to nil. For more information, please click here.
On 30 October 2024, ASIC announced the suspension of the registration of three Self-Managed Superannuation Fund (SMSF) auditors for one year. ASIC determined auditors Wuzhao Fang, Huiting Li and Xuan Wu breached independence requirements by auditing thousands of SMSF clients from a single referral source, who is a SMSF administration provider. The SMSF administration provider offers online SMSF setup and administration, including assisting the SMSF trustee to comply with their tax, accounting and audit obligations. As a result of the SMSF administration provider engaging a limited number of SMSF auditors, these SMSF auditors received more than 99% of their overall audit fees from the online platform. ASIC found that this created self-interest and intimidation threats to the SMSF auditors’ independence that were not able to be safeguarded against. For more information, please click here.
This document is provided for information purposes only and does not constitute legal, tax, investment, regulatory, accounting or other professional advice. For more information on the legal and regulatory status of IQ-EQ companies please visit www.iqeq.com/legal-and-compliance.