Greg Kilminster
Head of Product - Content
AFCA welcomes banks’ scams accord
The Australian Financial Complaints Authority (AFCA) has expressed its support for the ‘scam-safe accord’, an initiative by Australian banks to provide better protection against scams.
The accord includes a range of anti-scam measures that will be implemented across the entire industry. The accord’s centrepiece is a AUS$100 million funding commitment from the banking sector for a new payee confirmation system that will be rolled out across all banks in Australia. This system will allow individuals to confirm that they are transferring funds to the intended recipient.
David Locke, AFCA’s Chief Executive Officer and Chief Ombudsman, stated: “AFCA is pleased to see work start on ‘Confirmation of Payee’ and a commitment to roll this out across the whole banking system. We have been urging all banks to address this as it will be an important protection for consumers and small businesses to ensure they are making payments to the right accounts.”
In the first quarter of the new 2023-24 financial year, the AFCA received 2,856 scam-related complaints, up 57% from 1,819 in the previous three months and 125% higher than the same period a year earlier. The sums lost in these cases can exceed $1 million.
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SFC legal action against First Credit Finance Group Limited
The Securities and Futures Commission (SFC) has taken legal action against five former directors of First Credit Finance Group Limited (First Credit). The SFC alleges that the directors breached their fiduciary duties by not disclosing a de facto directorship, causing the company to publish false information.
As part of the legal action, the SFC is also seeking an order for First Credit to publish the court’s findings in the proceedings to inform shareholders.
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APRA consults on insurance definitions
The Australian Prudential Regulation Authority (APRA) has released for consultation a new cross-industry standard, Prudential Standard CPS 001, to centralise APRA’s existing standards on definitions for authorised deposit-taking institutions and general, life and private health insurers.
In an accompanying letter to banks and insurers, APRA notes that the consultation does not introduce any new defined terms but simply consolidates existing definitions into one place. It adds that the groundwork of this consolidation is key to the roll-out of a digital framework which will bring together all of APRA’s prudential standards, guidance and supporting information which is to be rolled out in the second half of 2024.
The deadline for comments on the consultation is 13 March 2024.
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ASIC consults on remaking class order on ETFs
The Australian Securities and Investments Commission (ASIC) ASIC has issued a consultation paper on their proposal to modify the Class Order [CO 13/721] relief. This modification aims to facilitate the quotation of exchange-traded funds (ETFs) on the AQUA (ASX Quoted Assets) Market.
Currently, the class order provides equal treatment relief for responsible entities and corporate directors (issuers). It also offers ongoing disclosure relief, relevant interest relief, substantial holding and beneficial trading relief for issuers. However, this class order expires on 1 April 2024. ASIC proposes to continue the relief currently provided in [CO 13/721] with an amendment to extend the current relief to a broader class of ETFs.
The deadline for feedback is 5 January 2024.
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FCA report on IFPR implementation
The Financial Conduct Authority (FCA) has released a report reviewing the implementation of the Investment Firms Prudential Regime (IFPR). The report primarily focuses on the Internal Capital and Risk Assessment (ICARA) process and provides detailed information on good and bad practices. This report is a follow-up to the initial findings published on 27 February 2023.
The IFPR and the corresponding prudential standards under MIFIDPRU came into force on 1 January 2022. The IFPR requires all firms within the scope of the regime to complete an ICARA process. Through this process, firms must identify the risks associated with their operations and assess the appropriate resources to mitigate harm, whether as a going concern or when winding down.
The FCA’s observations focus on three areas: capital adequacy , liquidity adequacy and wind-down planning.
While the FCA acknowledges that firms have made progress in understanding the requirements of the new regime, it has identified some areas for improvement. These include:
- Insufficient consideration of cash flows and liquidity stresses leading to an inadequate assessment of liquid asset requirements.
- Internal intervention points not structured effectively to ensure timely action to mitigate harm.
- Inadequate consideration of the impact of membership in a group for wind-down assessments.
- Significant failings in the application of capital models for operational risk.
Firms that are part of the multi-firm review will receive written feedback letters with a follow-up through usual supervisory activities.
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UK and Japan discuss financial regulatory issues
The UK government has summarised discussions from the 5th Financial Dialogue (FD) and the 2nd Financial Regulatory Forum (FRF) on 27 November 2023, in Tokyo held between Japan’s Ministry of Finance (MOF) and the Financial Services Agency (FSA) and the United Kingdom’s HMT, Bank of England (BOE) and Financial Conduct Authority (FCA).
The discussions addressed the following issues.
- Fintech innovation: Participants discussed innovations and developments in their respective FinTech markets, highlighting the benefits of fostering a business environment conducive to sector growth.
- Sustainable finance: information was shared on transition plans, sustainability reporting, and ESG ratings. There was a commitment made to maintaining momentum and cooperation on shared priorities, such as developing a common approach to transition planning and disclosures across jurisdictions.
- Asset management: Views were exchanged on reforms within the asset management industry in their respective jurisdictions. Japan highlighted policies to promote itself as a leading asset management centre, while the UK showcased its asset management taskforce’s work in harnessing innovative technologies.
- Non-bank financial intermediation (NBFI): The importance of domestic and international actions to address financial stability risks in NBFI, including open-ended funds, margin calls, and non-bank leverage, was noted. Implementing internationally agreed standards and monitoring policy implementation were highlighted.
- Banking turmoil and Basel III reforms: Discussions covered the banking turmoil in spring 2023, drawing lessons and exchanging views on banking regulation and supervision. Updates were provided on the implementation of the remaining parts of the Basel III reforms in their respective jurisdictions, emphasising the importance of full and consistent implementation.
- International Association of Insurance Supervisors (IAIS): Key projects of the IAIS were discussed. Commitment to collaborative work and ambition at the IAIS, particularly on projects like the Insurance Capital Standard and the recent report on natural catastrophe protection gaps, was reiterated.
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Australia consults on genetic testing in life insurance
The Australian government has issued a consultation paper to consider the concerns arising from the use of genetic testing in life insurance underwriting.
The consultation aims to address these concerns by reviewing the regulatory framework for the use of genetic testing in life insurance underwriting. The paper seeks feedback on both the impacts of life insurers using genetic test results in underwriting on genetic testing and research, as well as providing a range of potential policy responses.
The deadline for feedback to the consultation is 31 January 2024.
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