Key compliance trends in financial services continue to be highlighted as COVID pressed the fast-forward button on digital transformation for some organisations.
Regulators continue to play an important role in promoting RegTech adoption as businesses adjust to increased volumes online whilst focusing on a positive digital customer experience mindful that increased digital activity has created new risks.
We continue to track and identify relevant updates and bring you our Compliance Radar for June 2021.
Table of contents
- AUSTRAC updates guidance on Customer Identification Procedures
- FSC develops templates for the Design & Distribution Obligations
- Developments in Australia’s Consumer Data Right
- Senate Committee releases Second Interim Report on FinTech and RegTech
- ASIC bans the sale of binary option to retail clients
- Google faces fine for ‘deceptive conduct"
- Latest NPP Roadmap released April 30th
AUSTRAC updates guidance on Customer Identification Procedures
AUSTRAC recently updated their Applicable Customer Identification Procedures (ACIP) and ongoing ACIP resources which now include new guidance and example scenarios.
Reporting entities ACIP and ongoing customer due diligence are critical to protecting businesses and the community from serious and organised crime.
AUSTRAC states, “An oversight at the account opening stage could allow criminals to take advantage of your business, hurting your reputation and the community over the longer term.”
Contact LAB Group Customer Success for further consultation on these updates.
For more information visit AUSTRAC.
FSC develops templates for the Design & Distribution Obligations
The new rules for Target Market Determinations (TMD) under the Design Distribution and Obligations (DDO) legislation comes into effect on 5 October 2021.
The FSC and its members have developed a series of TMD templates for free to FSC members and under a paid annual licensing arrangement to non-members.
The DDO regime requires financial product issuers to identify a target market for each of their products and share information with third parties, including financial advisers, to understand the consumers who have purchased their products.
“Standardisation of information and data is important to the success of the DDO regime.
“Given the potential for complexity and associated cost from hundreds of different templates and data standards, the FSC has developed templates which will assist companies write TMDs for the products they issue,” FSC CEO Sally Loane said.
For more information visit the Financial Services Council.
Developments in Australia’s Consumer Data Right
Based on Consumer Data Right (CDR) community feedback, draft rules to broaden access arrangements are being developed and will be released soon for formal consultation. These will include changes to:
- Empower consumers to give accountants, lawyers, tax practitioners, licensed financial advisers and planners, and residential mortgage brokers (referred to as ‘trusted advisers)’ access to CDR data.
- Allow consumers to share certain ‘insights’ obtained from CDR data, to verify a consumer’s identity, their account balance, income level and expenses.
- Support new pathways for participation by allowing an Accredited Data Recipient to sponsor other parties to become accredited or allow their agents to participate in the system. For example, this will enable Accredited Data Recipients to share CDR data with other businesses in their data sharing ecosystem who are not accredited but who act on their behalf as an authorised agent, with liability for the acts of the agent attaching to the Accredited Data Recipient. Alternatively, an Accredited Data Recipient will also be able to assist another fintech to become accredited by ‘sponsoring’ them into the system.
LAB has participated in discussions with Treasury on these matters and look forward to the release of the draft rules.
Click here to view the Treasury press release on the Consumer Data Right.
Senate Committee releases Second Interim Report on FinTech and RegTech
The Senate Select Committee on Australia as a Technology and Financial Centre has tabled a second interim report on financial and regulatory technology.
The report makes 32 recommendations which Committee Chair Andrew Bragg has described as a ‘series of quick wins’.
Recommendations include (among others):
- Making temporary changes to the Corporations Act enabling companies to hold virtual meetings, enabling electronic execution/witnessing of documents and electronic shareholder communication permanent (recommendations 1-4);
- Expanding the Consumer Data Right (CDR) to include other financial services, starting with the superannuation sector and then including sectors such as general insurance (recommendation 23);
- Establishing a new national body to consolidate regulatory responsibilities in relation to the implementation of the Consumer Data Right (recommendation 19);
- Increase international participation in the CDR and interoperability with similar schemes in other jurisdictions
- Review the ability for businesses to access relevant information from government registers (including ASIC registers and AEC electoral roll data) for the purposes of facilitating identity checks and offering Digital Identity services, particularly in comparison with how this access is facilitated in similar jurisdictions overseas.
For more information visit the Parliament of Australia website.
ASIC bans the sale of binary option to retail clients
ASIC bans the sale of binary options to retail clients. The ban took effect from Monday 3 May 2021 after ASIC found that binary options have resulted in and are likely to result in significant detriment to retail clients.
ASIC’s binary options ban brings Australian requirements into line with prohibitions in force in comparable markets and follows the commencement on 29 March 2021 of ASIC’s product intervention order imposing conditions on contracts for difference offered to retail clients.
Read the full ASIC Press Release here.
Google faces fine for ‘deceptive conduct’
In a world-first enforcement action brought by the ACCC, the Federal Court of Australia has found that Google LLC (Google) engaged in misleading conduct and made false representations to some of its users because of the way it presented its collection, storage and use of users’ personal location data in its privacy statements.
The decision emphasises that what is relevant is the “overall impression” given by a representation, notwithstanding that a close reading of the terms might reveal the accurate position.
Key takeaways include:
- Organisations should not assume that users will read all information made available to them.
- Organisations should carefully consider whether the language used in privacy statements and collection notices is likely to be understood by Australian users.
- The form and presentation of privacy statements, collection notices and privacy settings can be as important as the content.
- Organisations should be cautious when making representations to large groups of consumers. The court may find a contravention even if only some reasonable consumers are misled or likely to be misled.
Latest NPP Roadmap released April 30th
Every six months, the NPP Roadmap provides an updated overview of the plans to enhance and extend the Platform’s capabilities to meet wider needs of the payments ecosystem.
The April 2021 roadmap – now available here – includes updated numbers relating to the growing use of the NPP. There are now 75 million accounts able to make or receive NPP payments and the platform now processes an average of 2.2 million transactions a day. Close to 27 percent of all account-to-account credit transfers are being processed across the NPP.
The Roadmap also unveils the name chosen as the new official moniker for what was previously known as the Mandated Payments Service: PayTo.
PayTo will enable customers to pre-authorise third parties to initiate payments directly from their bank account. It removes the uncertainty of making and receiving payments from bank accounts with real-time account validation, fund verification, and notifications at various stages of payment.
NPP participating organisations are expected to start offering PayTo from mid-2022.