Risk Regulatory Update
/ASIC: AFSL closures mounting
A recent Wealth Data analysis shows that Australian financial services licensees are closing at a rate of 62 per week, with many of these closures dating back to 2021 reasons. This is due to the Australian Securities and Investments Commission (ASIC) identifying licensees that have not removed those advisers who did not pass the adviser exam. In 2022, 173 licensees have closed and 291 have closed for this current financial year.
ALRC releases background paper into legislation reform inquiry
The Australian Law Reform Commission (ALRC) has released a background paper for the financial services legislation inquiry. The paper reflects on submissions to Interim Report A (FSL6) and a number of stakeholders have expressed support for revising safe harbour provisions as a means of indicating compliance.
The Association of Financial Advisers (AFA) wrote in its submission that the current safe harbour provisions are very prescriptive and tightly applied obligation that has added to the burdens on the industry.
The SMSF Association is also backing reform because it would allow advisers and licensees to use their ethical and professional judgement.
ASIC responds to RI Advice Federal Court decision
The Australian Securities and Investments Commission (ASIC) responded to the Federal Court’s landmark decision against Australian financial services (AFS) licensee, RI Advice. RI Advice was found to have breached its licence obligations with the Court ruling that it did not act efficiently and fairly when it failed to have adequate risk management systems to manage its cyber security risks.
According to ASIC, a “significant number” of cyber incidents occurred at authorised representatives of RI Advice between June 2014 and May 2020, including an incident where “an unknown malicious agent obtained, through a brute force attack, unauthorised access to an authorised representative’s file server from December 2017 to April 2018 before being detected, resulting in the potential compromise of confidential and sensitive personal information of several thousand clients and other persons”.
RI Advice was also ordered to pay $750,000 towards ASIC’s costs.
ANZ sued by ASIC for overblown account balances and fees
ASIC is suing ANZ for overstating account balances and charging fees on these incorrect balances, alleging that between May 2016 and November 2018, around 165,750 ANZ customers were charged cash advance fees and interest for withdrawing or transferring money from their credit card accounts based on an incorrect account balance. A hearing has been scheduled.
