Risk Regulatory Updates
/ANZ to pay $10m in penalties for ‘unconscionable conduct’
The Federal Court has found ANZ breached its obligations as a financial services licensee during a period between 2003 and 2015 where some fees were charged in relation to periodic payments. The fees were charged for payments that could not be made due to insufficient funds in the customer’s bank account, and transaction fees for successful payments.
ANZ knew it may not legally be allowed to charge such fees from 2011, however, continued to charge the fees until 2015. ANZ admitted by not making remediation payments, it engaged in unconscionable conduct and failed to provide efficient, honest and fair financial services. A $10 million penalty is due.
FASEA code of ethics draft released, latest exam results published
After consultation, the Financial Adviser Standards and Ethics Authority (FASEA) has released the draft Financial Planners & Advisers Code of Ethics 2019 Guide for further consultation. The draft offers an explanation of intent and how the Code’s values and standards will be applied.
The Code of Ethics provides an ethical framework of values and standards for advisers when making professional judgements in the best interests of clients. The draft expands the Preliminary Response to Submissions released in late 2019. The draft Financial Planners and Advisers Code of Ethics 2019 Guide can be accessed here. Submissions close on 2 November 2020.
The latest exam results have been released by FASEA from the August 2020 exam, with 82 per cent of candidates passing the exam. The average is 84 per cent across all exams. Over 1500 advisers sat the exam.
APRA continues work on sustainability of disability income insurance
The Australian Prudential Regulation Authority (APRA) will continue its work on the life insurance income protection market to quell heavy losses. ARPA announced a range of measures in December 2019 to address flaws in individual disability income insurance product design and pricing that saw the industry lose $3.4 billion across five years. Work was put on hold in March 2020, but after another $1.4 billion in losses since the announcement, APRA has deemed the issue to be so serious it must recommence its work.
From 1 October 2020, income protection providers will be subject to upfront capital penalties until APRA is convinced the companies have taken proper steps to address concerns around sustainability. Specific measures include:
Ensuring benefits don’t exceed the insured’s income at the time of claiming, and stop the sale of Agreed Value policies
Don’t offer disability income insurance with fixed terms and conditions over five years
Ensure controls are in place to manage risks inherent in longer benefit periods
FSC TPD and life insurance initiatives continued
The Financial Services Council (FSC) has extended its initiative for anyone who loses their job, are stood down or have reduced working hours due to the pandemic, to avoid total and permanent disability (TPD) cover being affected by income. The scheme is now extended until 1 January 20212, with claims to be made by 31 March 20212.
The FSC has also extended its frontline healthcare worker initiative, whereby those looking to take out new life insurance policies will not be prevented from doing so due to an increased risk of contracting COVID-19. This initiative is also extended until 1 January 2021.
Westpac agrees to $1.3bn AUSTRAC deal
Westpac will pay a civil penalty of $1.3 billion for its contraventions of anti-money laundering and counter-terrorism laws. Westpac has admitted to extra contraventions relating to additional International Funds Transfer Instructions (IFTIs), reporting failures, failures to reasonably monitor customers for transactions related to possible child exploitation, and two further failures to assess risks associated with banking relationships.
