On 6 February 2020, the Financial Sector Reform (Hayne Royal Commission Response – Stronger Regulators (2019 Measures)) Bill 2019 (Stronger Regulators Bill) and the Financial Sector Reform (Hayne Royal Commission Response – Protecting Consumers (2019 Measures)) Bill 2019 (Protecting Consumers Bill) passed both Houses of Parliament and now await Royal Assent.
The Stronger Regulators Bill implements certain recommendations of the Australian Securities & Investments Commission (ASIC) Enforcement Review Taskforce which was established in October 2016 to review the enforcement regime available to ASIC. A summary of the recommendations implemented by the Stronger Regulators Bill is set out below.
Effectively, the Stronger Regulators Bill harmonises ASIC’s search warrant powers by:
Under these enhanced provisions, ASIC can apply for a search warrant for certain indictable offences as well as search, seize and use evidential material to perform its functions and duties and exercise its powers.
The Stronger Regulators Bill allows interception agencies to provide ASIC with information about interception warrants or lawfully intercepted material for the investigation of serious offences. ASIC members or staff members are also empowered to use, record or provide another person with this information for a permitted purpose.
ASIC’s licensing powers and the offences for false and misleading documents are also strengthened by the Stronger Regulators Bill. This is facilitated through an update to the Australian financial services (AFS) licensing regime by replacing the requirement that a person be of “good fame and character” with the requirement that they be a “fit and proper person” when granting an AFS licence. ASIC is also empowered to refuse to grant an AFS licence when an application is false or misleading.
ASIC’s banning powers are extended by the Stronger Regulators Bill with ASIC authorised to consider a broader range of activities related to non-compliance with financial services law and the management or oversight of the conduct of a financial services or credit business when making banning orders. In certain circumstances, ASIC is also empowered to make additional banning orders prohibiting a person from certain functions in a financial services or credit business.
The Protecting Consumers Bill gives effect to certain recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Hayne Royal Commission) by addressing concerns around unfair contract terms (recommendation 4.7), consumer protection provisions (recommendation 4.2) and the conduct of mortgage brokers (recommendations 1.2 and 1.3).
The Protecting Consumers Bill implements these recommendations by:
Accordingly, these two Bills aim to respond to the concerns raised by the Hayne Royal Commission by strengthening ASIC’s enforcement practices and implementing better protections for consumers.
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