pwc march 2020 regulatory update · pwc 8 2. what have the regulators been up to? pwc regulatory...
TRANSCRIPT
PwC Regulatory Update
March 2020
PwC 2
Contents
PwC Regulatory Update
3Legislative/Government
developments
6What have
the regulators been up to?
12Industry bodies
14Overseas
developments
18PwC publications
20Contacts
Legislative/Government developments
PwC
Government consults on Mandatory Credit Reporting Regime (CCR)
The Government has released an exposure draft legislation, National Consumer
Credit Protection Amendment (Mandatory Credit Reporting) Regulations 2020,
to support the enforcement of the CCR regime. The draft legislation will require
all large authorized deposit-taking institutions (ADIs) to supply 50 per cent of
their consumer credit information within 90 days of 1 April 2020 and the
remaining 50 per cent within 90 days of 1 April 2021 to all credit-reporting
bodies it had an existing agreement with on 2 November 2017.
Source: Treasury
4
1. Legislative/Government developments
PwC Regulatory Update
Legislative/
Government
developments
Overseas
developments
What have
the regulators
been up to?
PwC
publicationsContacts
Industry
bodies
Government passes legislation through Parliament to enhance
protections for consumers and small businesses
The Government has passed the legislation, The Financial Sector Reform
(Hayne Royal Commission Response – Protecting Consumers (2019
Measures)) Bill 2019, which will enhance protections for consumers and small
businesses, through the parliament. This includes:
• Banning campaign and volume-based commissions and payments; capping
soft dollar benefits; requiring mortgage brokers to act in the consumer’s best
interests when providing consumer credit assistance; reforming mortgage
broker remuneration by requiring the value of upfront commissions to be
linked to the amount drawn down by borrowers instead of the loan amount;
• Ensuring that the consumer protection provisions of the financial services
law apply to funeral expenses policies; and
• Banning unfair contract terms in standard insurance contracts.
The Government has also passed the legislation, Financial Sector Reform
(Hayne Royal Commission Response – Stronger Regulators (2019 Measures))
Bill 2019, which will strengthen the role of financial regulators, through the
parliament. The bill will implement four further commitments to ensure the
Australian Securities and Investments Commission (ASIC) is able to more
effectively enforce existing laws.
Source: Treasurer of the Commonwealth of Australia
PwC
Improving flexibility of superannuation for older Australians
The Government has released an exposure draft bill and regulation, Treasury
Laws Amendment (Measures for a later sitting) Bill 2020: Improving Flexibility
for Older Australians which will introduce the following changes:
• The draft regulation will amend the Superannuation Industry (Supervision)
Regulations 1994 (SIS Regulations) to reduce the age limit to allow people
up to age 74 to receive spouse contributions and people up to age 66 to
make voluntary contributions without meeting the work test; and
• The draft bill will amend the Income Tax Assessment Act 1997 (ITAA) to
reduce the age limit to allow people up to age 66 to access the bring-forward
arrangements for non-concessional contributions.
Submissions are due by 3 April 2020.
Source: Treasury
5
1. Legislative/Government developments
PwC Regulatory Update
Issue paper on inquiry into future directions for the Consumer Data Right
The Inquiry into Future Directions for the Consumer Data Right (the Inquiry) has
released a self-titled issue paper which examines the ways in which the
Consumer Data Right could be enhanced in order to boost competition,
innovation and support the development of an efficient and safe digital
economy. This includes exploring the expansion of this to include ‘write’ access
which allows a consumer to provide consent to a trusted third party to change or
add data about a consumer.
Submissions are due by 23 April 2020.
Source: Treasury
Legislative/
Government
developments
Overseas
developments
What have
the regulators
been up to?
PwC
publicationsContacts
Industry
bodies
What have the regulators been up to?
PwC 7
2. What have the regulators been up to?
PwC Regulatory Update
APRA proposes to uplift transparency around life and general insurance
data
The Australian Prudential Regulation Authority (APRA) intends to improve
public access to industry-aggregate data for the life insurance (LI) and general
insurance (GI) sectors by proposing to classify certain data as non-confidential
and publishing a greater breadth of data. APRA is seeking to promote:
• Competition, contestability and efficiency in the financial system;
• Innovative uses of data;
• Greater consumer understanding and more informed public discussion of
insurance-related issues; and
• Informed decision-making for all market participants, consultants, analysts
and other users of the GI and LI statistical publications.
Source: APRA
APRA and ASIC welcome legislation on superannuation regulator roles
APRA and ASIC have welcomed the proposed draft legislation which will
support both regulators in carrying out their roles as co-regulators in
superannuation. The proposed reforms include retaining APRA as the
prudential and member-outcomes regulator while expanding ASIC’s role as
conduct regulator in superannuation. The regulators have released a joint letter
to superannuation trustees addressing how regulatory oversight will operate
under these proposed reforms.
Source: APRA
APRAAustralian Prudential Regulation
Authority
ASICAustralian Securities and Investments
Commission
ASXAustralian Securities Exchange
RBAReserve Bank of Australia
Legislative/
Government
developments
Overseas
developments
What have
the regulators
been up to?
PwC
publicationsContacts
Industry
bodies
PwC 8
2. What have the regulators been up to?
PwC Regulatory Update
ASIC consults on relief for companies planning an initial public offering
ASIC has released a consultation paper, Initial public offers: Relief for voluntary
escrow and pre-prospectus communications, and is seeking feedback on
proposals to grant conditional relief for voluntary escrow arrangements and pre-
prospectus communications in connection with an initial public offer (IPO). The
proposals include:
• Allowing public companies, professional underwriters and lead managers
who have obtained relevant interests as a result of voluntary escrow
arrangements to disregard them for the purposes of the takeover provisions;
and
• Permitting companies to communicate information to security holders and
employees before the company lodges an IPO prospectus.
Submissions are due by 6 April 2020.
Source: ASIC
ASIC update on enforcement and regulatory work
ASIC has provided an update on its enforcement and regulatory work since
September 2019, covering:
• Implementation of the Financial Services Royal Commission’s (FSRC’s)
recommendations;
• Enhanced supervision program; and
• ASIC’s use of new regulatory tools and powers in identifying and addressing
misconduct and poor consumer outcomes.
Specifically, the work conducted has included the following:
• Operationalising and expanding the Office of Enforcement, including new
and increased civil and criminal penalties, to take action in response to
market, corporate and financial sector misconduct;
• Continuing enhanced supervision program across large listed entities in the
financial services and other sectors, focusing on non-financial risk
management and oversight;
• Completing implementation of four of the 10 recommendations by the FSRC
that were directed at ASIC, and providing input to Government on its
legislative reform program in response to the FSRC’s recommendations; and
• Continuing to implement and use ASIC’s new regulatory powers to identify
and address misconduct and poor consumer outcomes.
Source: ASIC
ASXAustralian Securities Exchange
RBAReserve Bank of Australia
APRAAustralian Prudential Regulation
Authority
ASICAustralian Securities and Investments
Commission
Legislative/
Government
developments
Overseas
developments
What have
the regulators
been up to?
PwC
publicationsContacts
Industry
bodies
PwC 9
2. What have the regulators been up to?
PwC Regulatory Update
ASIC consults on draft guidance on the new best interests duty for
mortgage brokers
ASIC is consulting on draft guidelines about the new best interests duty for
mortgage brokers through the Consultation paper, Implementing the Royal
Commission recommendations: Mortgage brokers and the best interests duty in
order to understand how the guidance can best assist brokers to meet these
new legal obligations.
From 1 July, the obligations will require mortgage brokers to act in the best
interests of consumers and to prioritise consumers' interests when providing
credit assistance.
Submissions are due by 20 March 2020 and intends to publish final guidance
before the obligations commence on 1 July 2020.
Source: ASIC
ASIC releases report reviewing trustees' Protecting Your Superannuation
Package (PYSP)
ASIC has released a report, presenting the findings from its recent review of
trustee communications to superannuation fund members about changes
introduced through the Treasury Laws Amendment (Protecting Your
Superannuation Package) Act 2019. The report sets out ASIC’s expectations
about trustees' future communications to members and contributes to ASIC’s
ongoing body of work in relation to insurance in superannuation.
Source: ASIC
APRAAustralian Prudential Regulation
Authority
ASICAustralian Securities and Investments
Commission
ASXAustralian Securities Exchange
RBAReserve Bank of Australia
Legislative/
Government
developments
Overseas
developments
What have
the regulators
been up to?
PwC
publicationsContacts
Industry
bodies
PwC 10
2. What have the regulators been up to?
PwC Regulatory Update
ASX consults on second tranche of operating rule amendments of the
new system to replace CHESS
ASX is seeking feedback on the operation of the draft tranche 2 rule
amendments required to facilitate the operation of the new system to replace
CHESS in April 2021. The rule amendments should reflect the design for new or
changed functionality captured in the Technical Documentation released by
ASX. Proposed amendments include:
• Implementing new business requirements for the CHESS replacement
system;
• Reflecting the re-engineering of some existing functionality;
• Decommissioning some existing CHESS functionality; and
• Implementing other miscellaneous changes.
Submissions are due by 3 April 2020.
Source: ASX
ASX releases response to proposed changes to Bond Futures Roll
ASX has released a response paper, summarising the feedback received on
ASX’s consultation paper proposing changes to the 3 and 10 Year Bond
Futures Roll, as well as the changes that ASX intend to implement, including:
• Reduce the minimum tradable tick increment for the 3 Year Bond Futures
outright and roll from 0.5 basis points to 0.2 basis points for the period of the
Roll;
• Reduce the minimum tradable tick increment for 10 Year Bond Futures
outright and roll from 0.25 basis points to 0.1 basis points for the period of
the Roll; and
• The implementation of the reduced ticks is planned from the June 2020 roll
period.
ASX also plans to implement:
• Good Till Cancelled (GTC) functionality for the Bank Bill Futures spread
market;
• Assess applicability for the Roll to assess the impact of the reduction to the
minimum tick increment on the market dynamics;
• Efficiency of the Roll in isolation; and
• Cost effectiveness.
Source: ASX
APRAAustralian Prudential Regulation
Authority
ASICAustralian Securities and Investments
Commission
ASXAustralian Securities Exchange
RBAReserve Bank of Australia
Legislative/
Government
developments
Overseas
developments
What have
the regulators
been up to?
PwC
publicationsContacts
Industry
bodies
PwC 11
2. What have the regulators been up to?
PwC Regulatory Update
RBA renews bilateral local currency swap agreement with Bank of Korea
The RBA has renewed the bilateral local currency swap agreement with the
Bank of Korea for a further period of three years. The agreement will allow for
the exchange of local currencies between the two central banks of up to A$12
billion or KRW 9.6 trillion. Aimed at promoting bilateral trade for the economic
development of the two countries and improving financial stability.
Source: RBA
ISO 20022 Migration for the Australian Payments System RBA
Conclusions Paper released
The RBA has released the conclusions paper on International Organization for
Standardization (ISO) 20022 Migration for the Australian Payments System in
collaboration with the Australian Payments Council (APC). The conclusions
paper is summary of the RBA and APC's final conclusions based on industry
consultation, and the decisions will guide the direction for the industry-led
project of migrating payments messaging to the ISO 20022 messaging
standards.
Following the release of this paper, Australian Payments Network (AusPayNet)
will establish the following:
• Governance arrangements as set out in the paper;
• Develop a work plan for the migration project; and
• Establish initial working groups.
Source: RBA
APRAAustralian Prudential Regulation
Authority
ASICAustralian Securities and Investments
Commission
ASXAustralian Securities Exchange
RBAReserve Bank of Australia
Legislative/
Government
developments
Overseas
developments
What have
the regulators
been up to?
PwC
publicationsContacts
Industry
bodies
Industry bodies
PwC
FSC responds to Registrable Superannuation Entity (RSE) licencing
charges
The FSC has released its submission on Exposure Draft (ED) legislation,
relating to the following recommendations from the Royal Commission:
• RSE licence condition – no other duty; and
• ASIC regulation of superannuation.
Specifically, the FSC’s submission to Government highlights the following:
• Extending the commencement date to allow 24 months from Royal Assent
for full compliance with the requirement to separate Responsible Entity (RE)
and RSE functions;
• Expediting additional relief for licensees transferring RE or RSE functions to
another entity within the same corporate group, including simplifying the
requirements for license applications;
• Ensuring structural changes required as a result of this legislation are tax
neutral, with all necessary tax relief provided as necessary to achieve this
aim; and
• Clarifying license and authorisation requirements for external services
providers, including administrators.
Source: FSC
13
3. Industry bodies
PwC Regulatory Update
Royal Commission changes to Banking Code go live
Changes to the Banking Code of Practice in line with the recommendation by
the Royal Commission has gone live, the changes include:
• Ceasing default interest on agricultural loans while farms are affected by
drought or natural disaster;
• Ensuring services to people with limited English and those living in remote
areas are inclusive and accessible;
• Removing overdraft and dishonour fees on basic, low fee or no fee accounts
for concession card holders; and
• Guaranteed features for basic bank accounts.
Source: ABA
ABAAustralian Banking Association
FSCFinancial Services Council
Legislative/
Government
developments
Overseas
developments
What have
the regulators
been up to?
PwC
publicationsContacts
Industry
bodies
Overseas developments
PwC
4. Overseas developments – Europe
EBA consults on guidelines on the
appropriate subsets of exposures in the
application of the systemic risk buffer
The European Banking Authority (EBA) is
consulting on draft guidelines on the appropriate
subsets of sectoral exposures where competent
or designated authorities may apply a systemic
risk buffer (SyRB) in accordance with the Capital
Requirements Directive (CRD). The EBA aims to
establish a centralised EU framework to
harmonise the design of the appropriate subsets
of sectoral exposures where a systemic risk buffer
may be applied.
Submissions are due by 12 May 2020.
Source: EBA
EBA publishes its final opinion on the
implementation of the DGSD in the EU.
The EBA has published its third and final opinion
addressed to the European Commission on the
implementation of the Deposit Guarantee
Schemes Directive (DGSD). The DGSD focuses
on deposit guarantee schemes (DGS) funding
and uses of funds and proposed a number of
changes to the EU legal framework, aiming to
enhance financial stability, strengthen depositor
protection and reinforce financial resilience of
DGSs.
Source: EBA
ECB seeks feedback on amendments to the
Regulation on payments statistics
The European Central Bank (ECB) is consulting
on amendments to the Regulation on payments
statistics, aiming to keep the ECB’s statistics fair
after an assessment of the merits of new
requirements and potential costs to reporting
agents.
The draft regulation introduces reporting
requirements for information on innovative
payment services and channels, payment
schemes, and fraudulent payment transactions.
The information aims to assist the ECB in
facilitating and managing payment systems, areas
of retail payments more effectively and aims to
enhance their understanding of cross-border trade
and economic developments.
Submissions are due by 9 April 2020.
Source: ECB
15
PwC Regulatory Update
Legislative/
Government
developments
Overseas
developments
What have
the regulators
been up to?
PwC
publicationsContacts
Industry
bodies
PwC
4. Overseas developments – UK
Liquidity: The PRA's approach to supervising
liquidity and funding risks
The Prudential Regulation Authority (PRA) has
released a policy statement, in response to their
consultation paper, Liquidity: The PRA’s approach
to supervising liquidity and funding risks. The
policy statement includes their final policy and an
updated Supervisory Statement.. This policy
statement is relevant to all PRA-authorised UK
banks, building societies and PRA-designated UK
investment firms.
Source: Bank of England
PRA consults on Pillar 2A: Reconciling capital
requirements and macroprudential buffers
The PRA is consulting on their proposal to update
the Pillar 2A capital framework aiming to take into
account the additional resilience associated with
higher macroprudential buffer requirements in a
standard risk environment. This consultation
paper is a response to the Financial Policy
Committee (FPC) raising the level of UK
countercyclical capital buffer (CCyB) by 1
percentage point.
Submissions are due by 30 April 2020, with a
proposed policy implementation date of 6 July
2020.
Source: Bank of England
16
PwC Regulatory Update
Legislative/
Government
developments
Overseas
developments
What have
the regulators
been up to?
PwC
publicationsContacts
Industry
bodies
PwC
4. Overseas developments – US
17
PwC Regulatory Update
FDIC and OCC extend comment period for
proposed changes to Community
Reinvestment Act Rules
The Office of the Comptroller of the Currency
(OCC) and Federal Deposit Insurance
Corporation (FDIC) have extended the
consultation period for proposed changes to the
rules implementing the Community Reinvestment
Act (CRA) to 8 April 2020.
The proposed rules are intended to increase bank
activity in low- and moderate-income communities
where more responsible lending, access to
banking services and lines of credit are more
crucial. The proposed rules would be applicable to
all federally insured depository institutions
supervised by the FDIC and OCC.
Source: OCC
OCC consults on proposals to eliminate
unnecessary licensing requirements
The Office of the Comptroller of the Currency
(OCC) is seeking feedback on proposed changes
to update the licensing policies and procedures,
aiming to eliminate any unnecessary licensing
requirements.
Proposed changes include, but are not limited to:
• Permitting national banks and federal savings
associations to follow only the procedures
applicable to state banks or state savings
associations respectively, for certain business
combinations;
• Expanding the operating subsidiary notice and
expedited review processes to include
activities that are substantively the same as
activities previously approved by the OCC; and
• Providing procedures for granting and revoking
citizenship and residency waivers for national
bank directors.
Submissions are due by 4 May 2020.
Source: OCC
SEC proposes rule changes to streamline the
exempt offering framework
The Securities and Exchange Commission (SEC)
is seeking feedback on proposed amendments to
simplify and improve the exempt offering
framework, aiming to facilitate capital formation
and investment opportunities while preserving
investor protections.
The framework requires offerings of securities to
be either registered with the SEC or qualify for an
exemption from their registration requirements.
The proposed amendments aim to address gaps
and complexities in the existing exempt offering
framework that may impede access to investment
opportunities for investors and capital for issuers.
Source: SEC
Legislative/
Government
developments
Overseas
developments
What have
the regulators
been up to?
PwC
publicationsContacts
Industry
bodies
PwC publications
PwC
5. PwC publications
PwC Australia: Design and Distribution
Obligations (DDO) ASIC Compliance from 5
April 2021
PwC has published a report, Design and
Distribution Obligations (DDO) ASIC Compliance
from 5 April 2021, analysing the impact of DDO
on how financial products are distributed to retail
consumers. The report identifies the four
necessary design and distribution obligations for
issuers and distributors respectively, highlighting
the key transitions in order to comply with the
DDO legislation and how PwC can help.
See publication
PwC Australia: Regulatory reporting audit
requirements for RFCs
PwC has published a report, Regulatory reporting
audit requirements for RFCs, analysing the
impact of APRA’s new reporting standard, RRS
710.0 ABS/RBA Audit Requirements for
Registered Financial Corporations - EFS
Collection (RRS 710.0) for Registered Financial
Corporations (RFCs). The report compares RRS
710.0 with other regulatory standards and
considerations for RFCs.
See publication
19
PwC Regulatory Update
PwC China: Seizing opportunities from China-
US trade deal and managing tax risks
PwC has published a report, Seizing opportunities
from China-US trade deal and managing tax risks:
A game-changer for US asset managers to
improve access to China financial market,
highlighting the Chinese tax considerations for the
US and global asset managers when structuring
market access in Chinese investment asset
classes as a result of “phase-one” of the trade
agreement.
The report analyses the challenges and future
products in the non-performing loan (NPL) sector
and the Chinese tax environment that emerge
from these opportunities that have arisen from this
new agreement as there are ambiguous
interpretation of tax policies and inconsistent
enforcement.
See publication
Legislative/
Government
developments
Overseas
developments
What have
the regulators
been up to?
PwC
publicationsContacts
Industry
bodies
Contacts
PwC 21
6. Contacts
PwC Regulatory Update
Nicole Salimbeni
Partner
Email: [email protected]
Tel: (02) 8266 1729
Edwina Star
Partner
Email: [email protected]
Tel: (02) 8266 4940
Amrita Jebamoney
Partner
Email: [email protected]
Tel: (02) 8266 1826
Sarah Hofman
Partner
Email: [email protected]
Tel: (02) 8266 2231
Craig Stafford
Partner
Email: [email protected]
Tel: (02) 8266 3725
Legislative/
Government
developments
Overseas
developments
What have
the regulators
been up to?
PwC
publicationsContacts
Industry
bodies
www.pwc.com.au
Thank you
www.pwc.com.au
© 2019 PricewaterhouseCoopers. All rights reserved.
PwC refers to the Australia member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure
for further details.
This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
Liability limited by a scheme approved under Professional Standards Legislation.
At PwC Australia our purpose is to build trust in society and solve important problems. We’re a network of firms in 158 countries with more than 236,000 people who are
committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.au.
WL 127067461