Australia

2023-24 Update on Licensing and Professional Registration Activities

ASIC issued an update on its licensing and professional registration activities to assist current and prospective Australian Financial Services (AFS), and credit licensees understand the licensing 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 licensing processes.

Date of Release: 11 Oct 2024

Implementation on: 11 Oct 2024

Applicable to: AFS and credit licensees

Changes to OTC Derivative Transaction Reporting

The ASIC Derivative Transaction Rules (Reporting) 2022 was replaced by ASIC Derivative Transaction Rules (Reporting) 2024 (2024 Reporting Rules). The following are the changes which can be seen in the 2024 Reporting Rules: aligning with the international reporting standards, consolidation of transitional provisions and exemptions and ensure reporting requirements are fit for their purposes.

Date of Release: 21 Oct 2024

Implementation on: 21 Oct 2024

Applicable to: OTC Derivatives Markets

Updated Regulatory Guidance for the Resignation, Removal, and Replacement of Auditors

ASIC released its updated regulatory guidance for the resignation, removal and replacement of auditors. 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 a registerable superannuation entity (RSEs) or retail corporate collective investment vehicles (retail CCIVs), information required for resignation and removal applications, and relevant effective dates.

Date of Release: 24 Oct 2024

Implementation on: 24 Oct 2024

Applicable to: RSEs and retail CCIVs

Artificial Intelligence Adoption by Licensees

ASIC reminded financial services and credit licensees 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 licensees, which found potential for governance to lag behind AI adoption, despite current AI use being relatively cautious. ASIC’s findings revealed nearly half of licensees 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.

Date of Release: 29 Oct 2024

Implementation on: 29 Oct 2024

Applicable to: AFS and credit licensees

New Enforcement Priorities

ASIC announced its enforcement priorities for 2025, capturing the key areas where it will direct resources and expertise in the coming year. In 2025, ASIC’s enforcement priorities will focus on: misconduct exploiting superannuation savings; unscrupulous property investment schemes; failures by insurers to deal fairly and in good faith with customers; strengthening investigation and prosecution of insider trading; business models designed to avoid consumer credit protections; misconduct impacting small businesses and their creditors; debt management and collection misconduct; licensee failures to have adequate cyber-security protections; greenwashing and misleading conduct involving ESG claims; member services failures in the superannuation sector; auditor misconduct; and used car finance sold to vulnerable consumers by finance providers.

Date of Release: 14 Nov 2024

Implementation on: Enforcement priorities for 2025

Applicable to: Financial Services Industry

New and Updated Guidance in Response to the DBFO Act

ASIC announced the issuance of new regulatory guidance and updates to some existing regulatory guidance in response to reforms under the Treasury Laws Amendments (Delivering Better Financial Outcomes and Other Measures) Act 2024 (DBFO Act). ASIC’s new regulatory guidance includes four new information sheets and updates to Regulatory Guide 246 Conflicted and other banned remuneration (RG 246) and Regulatory Guide 175 AFS Licensing: Financial product advisers–Conduct and disclosure (RG 175). The new information sheets are: (i) Information Sheet 286 FAQs: Ongoing fee arrangements and consents; (ii) Information Sheet 287 FAQs: Non-ongoing fee requests or consents; (iii) INFO 291 FAQs: FSGs and website disclosure information; and (iv) INFO 292 FAQs: Informed consents for insurance commissions.

Date of Release: 21 Nov 2024

Implementation on: 21 Nov 2024

Applicable to: Financial Advisers

Extension of Arrangements to Streamline Insurance Payments in Emergency Situations

ASIC announced the extension of legislative relief that allows insurers and their representatives to provide emergency payments to consumers, under certain circumstances, without first giving them a Cash Settlement Fact Sheet (CSFS). This relief, which is due to expire on 11 February 2025, was reviewed for its appropriateness. ASIC has decided to extend it with one minor amendment: from 22 November 2024, insurers can use the streamlined process when the offer is made within 42 days of an insurable event, rather than the previous limit of 14 days. This change was made following industry feedback indicating that consumers may not be able to make a claim within 14 days after a catastrophic event.

Date of Release: 22 Nov 2024

Implementation on: 22 Nov 2024

Applicable to: Insurers

ASIC update on maintenance of regulatory guides

ASIC announced that it is working on updating its regulatory guides to ensure they remain simple to follow, effective, current and appropriate. This is a part of ASIC’s commitment to improve regulatory efficiency and reduce regulatory complexity. In 2025, ASIC will consult with stakeholders to update some key RGs, considering law reform, insights from case law about the provisions and other relevant issues. The RGs that ASIC intends to update next year, include Regulatory Guide 53 The use of past performance in promotional material; Regulatory Guide 168 Disclosure: Product Disclosure Statements (and other disclosure obligations); Regulatory Guide 181 Licensing: Managing conflicts of interest; Regulatory Guide 183 Approval of financial services codes of conduct; and Regulatory Guide 234 Advertising financial products and services (including credit): Good practice guidance.

Date of Release: 25 Nov 2024

Implementation on: Consultation expected in 2025

Applicable to: Financial Services Industry

Observations from the Banking Industry’s Implementation of the Financial Accountability Regime

ASIC and the Australian Prudential Regulation Authority (APRA) published a letter containing observations on registration and notification lodgements made since the Financial Accountability Regime (FAR) commenced for the banking industry. The letter identifies areas that require further consideration by banking entities and reiterates specific aspects, consistent with previously released FAR guidance, to entities across the banking, insurance and superannuation industries.

Date of Release: 27 Nov 2024

Implementation on: 27 Nov 2024

Applicable to: Banking, Insurance, and Superannuation Industries

IOSCO Reports Outlining Key Developments for Global Market Regulators

ASIC announced that the International Organization of Securities Commissions (IOSCO) has published a number of reports outlining key challenges and opportunities for global market regulators. Consultation reports related to IOSCO’s investor protection objective include a report on pre-hedging and reports aimed at enhancing retail investor online safety, which relate to finfluencers, copy-trading, and digital engagement practices.

Date of Release: 28 Nov 2024

Implementation on: 28 Nov 2024

Applicable to: Market Participants and Finfluencers

Key Observations from Inaugural IDR Data Publication

ASIC released its first publication of industry-wide data reported under the internal dispute resolution (IDR) data reporting framework. Under the IDR framework, most licensed financial firms are required to report IDR data to ASIC on a six-monthly basis. This inaugural industry-wide report is a key milestone in the implementation of the framework. Key observations from the over 4.7 million complaints reported by financial firms of all types for the period 1 July 2023 to 30 June 2024 include: (i) General insurance products were subject to the most complaints (33% of all complaints), followed by credit products (22%) and deposit-taking products (15%); (ii) most complaints were about service (45%), followed by charges (22%) and transactions (11%); (iii) most outcomes involved an explanation or apology only, or no remedy (43%), followed by a service-based remedy (39%) and a monetary remedy (13%); (iv) over three-quarters of all complaints were resolved within one day; and (v) 623,555 complaints resulted in a monetary remedy, collectively totaling over $375 million.

Date of Release: 3 Dec 2024

Implementation on: 3 Dec 2024

Applicable to: Licensed Financial Firms

Reportable Situations Regime Compliance

ASIC released the results of its review of the compliance arrangements of 14 licensees of different sectors and sizes who had low numbers of reportable situations or had not reported at all. Australian financial services and credit licensees have an obligation to report breaches to ASIC under the reportable situations’ regime. ASIC uses this information to identify and address emerging trends of non-compliance and take regulatory action where appropriate. Reforms to the reportable situations regime in 2021 expanded what was reportable and pushed for more timely and consistent reporting.

Date of Release: 4 Dec 2024

Implementation on: 4 Dec 2024

Applicable to: Financial Services and Credit Licensees

Reissuance of Regulatory Guide 133 on Funds Management and Custodial Services

ASIC reissued Regulatory Guide 133 Funds management and custodial services: Holding assets to provide the latest guidance to asset-holding Australian financial services (AFS) licensees. Relevant AFS licensees include responsible entities of registered managed investment schemes and licensed providers of custodial services.

Date of Release: 10 Dec 2024

Implementation on: 10 Dec 2024

Applicable to: AFS Licensees

Material Service Provider Register Template

The APRA released a material service provider register template as announced in the Response to submissions – CPG Operational Risk Management publication in June 2024. The template was developed to assist entities in demonstrating the linkages between their critical operations and the material service providers they rely upon. The use of the template is APRA’s preferred method for regulated entities to submit their registers to APRA for meeting the requirement of paragraph 51 of Prudential Standard CPS 230 Operational Risk Management. A completed material service provider register is to be submitted back to APRA by authorised deposit-taking institutions (ADIs), superannuation trustees, and insurers by 1 October 2025.

Date of Release: 17 Oct 2024

Implementation on: Completed material service provider register to be submitted by 1 Oct 2025

Applicable to: Authorised Deposit-taking Institutions, Superannuation Trustees, and Insurers

Letter to RSE Licensees on Intensified Supervision Approach

The APRA published a letter to all registrable superannuation entity (RSE) licensees outlining its approach for intensifying supervision of fund-level expenditure. APRA will intensify its scrutiny of fund-level expenditure to hold RSE Licensees accountable to improve practices, reduce spending that is deemed to not be in members’ best financial interests and promote the financial interests of their members.

Date of Release: 22 Oct 2024

Implementation on: Over the next 12 months

Applicable to: RSE licensees

Amendments to Operational Risk Financial Requirements for Superannuation Trustees

The APRA announced that it has amended the operational risk financial requirements (ORFR) as set out in Prudential Standard SPS 114 Operational Risk Financial Requirement (SPS 114). The changes aim to strengthen operational resilience by ensuring trustees can better access the financial resources held to meet the ORFR when needed and to maintain an appropriate level of reserving.

Date of Release: 24 Oct 2024

Implementation on: 1 Jul 2025

Applicable to: Superannuation Trustees

Response to Consultation on Minor Amendments to Prudential Framework

APRA released a response to consultation on proposed minor amendments to the prudential framework for authorised deposit-taking institutions (ADIs), insurers and registrable superannuation entity (RSE) licensees. The aim is to refresh prudential framework in a timely manner between more comprehensive reviews of prudential standards.

Date of Release: 5 Dec 2024

Implementation on: Refer to the effective dates indicated in the letter.

Applicable to: ADIs, Insurers, and RSE licensees

Finalisation of the Enhancements to Superannuation Data Collections

The APRA announced the finalisation of the enhancements to superannuation data collections covering investments, trustee licensee profile and trustee profile. The enhanced data collection will further strengthen APRA’s ability to assess the financial resilience of funds and the robustness of governance, including investment governance, to deliver improved and equitable outcomes for superannuation members.

Date of Release: 6 Dec 2024

Implementation on: First data to be submitted in Dec 2025

Applicable to: Trustees

The Need for Improved Valuation and Liquidity Risk Governance in Superannuation

The APRA released findings from a review into superannuation trustees’ progress in implementing enhanced valuation governance and liquidity risk management requirements. The review found that while trustee capability and approach have generally improved since APRA’s last unlisted asset review in 2021, a significant proportion of trustees still displayed material gaps in key areas. The findings indicated that 12 of the 23 in-scope RSE licensees require material improvements in either or both their valuation governance or liquidity risk management frameworks to meet the requirements of SPS 530.The findings will help trustees in aligning their practices with Prudential Standard SPS 530 Investment Governance, including in relation to the use of independent external asset valuations and the effective management of potential conflicts of interest in valuation processes.

Date of Release: 17 Dec 2024

Implementation on: 17 Dec 2024

Applicable to: RSE licensees

Updates to RG 51 Applications for Relief and RG 108 No-action Letters

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.

Consultation Period: 21 Oct 2024 – 18 Nov 2024

Applicable to: Applicants and Advisers who are applying to ASIC for relief or no-action letter

Proposed Guidance on Sustainability Reporting Regime

ASIC released a draft regulatory guide on the sustainability reporting regime. This regime requires many large Australian businesses and financial institutions to prepare annual statutory sustainability reports containing climate-related financial disclosures starting from 1 January 2025. The draft Regulatory Guide 000 Sustainability Reporting (Draft RG 000) includes guidance on who must prepare a sustainability report, how the regime will interact with existing legal obligations, and how ASIC will administer the sustainability reporting requirements. It also provides specific guidance on ASIC’s approach to granting relief from the regime and the use of its new directions power. ASIC is seeking feedback on the draft guidance, which is due by 19 December 2024.

Consultation Period: 7 Nov 2024 – 19 Dec 2024

Applicable to: Large Australian businesses and financial institutions

Proposed Updates to Digital Asset Guidance

ASIC released Consultation paper 381 Updates to INFO 225: Digital Assets: Financial Products and Services (CP 381) outlining proposals to update Information Sheet 225 Crypto Assets (INFO 225). To provide greater clarity about the current law, ASIC has proposed a range of updates to INFO 225, including adding 13 practical examples of how the current financial product definitions apply to digital assets and related products.

Consultation Period: 4 Dec 2024 - 28 Feb 2025

Applicable to: Digital Assets and Related Products

Adjustments to General Insurance Reinsurance Framework

The APRA is consulting on targeted adjustments to its general insurance (GI) reinsurance framework. Reinsurance provides significant benefit to Australian insurers and policyholders, as it gives stability to general insurance (GI) by helping in risk management and to meeting capital requirements.

Consultation Period: Until 17 Feb 2025

Applicable to: Insurers and Policyholders

Exploring the Role of Digital Money in Wholesale Tokenised Asset Markets

The RBA and the Digital Finance Cooperative Research Centre published a consultation paper seeking the feedback from the industry for a new research initiative, Project Acacia. This project has the goal of learning how different forms of digital money can support the development of wholesale tokenised asset markets in Australia.

Consultation Period: Until 11 Dec 2024

Applicable to: Wholesale Tokenised Asset Markets