Senate inquiry into consumerprotection in the banking,insurance and financialsectorSubmission by the AustralianSecurities and InvestmentsCommissionMarch 2017
Senate inquiry into consumer protection in the banking, insurance and financial sector: Submission by ASICContentsOverview.3ASIC’s role in the financial system .3ASIC’s areas of focus .5Importance of current law reform processes .6Outline of submission .7AFailures in current laws, regulatory framework and enforcement .9Recommendations of the Financial System Inquiry .9Our work to address issues in the financial services sector .16External dispute resolution .61Enforcement.64BImpact of misconduct on victims and consumers .70Investor and financial consumer losses.70Consumer remediation processes .71Barriers to making good financial decisions .72Addressing potential impact of misconduct .75CImpact of remuneration, incentive based commissionstructures, and fee-for-no service or recurring fee structures .79Fee for no service or recurring fee structures.79Commission structures .82Conflicts of interest in funds management .88DCulture and chain of responsibility in relation to misconduct .90Culture and conduct .90Breach reporting to ASIC .94Whistleblower policies .94ERedress, compensation and legal advice for victims ofmisconduct .96Compensation arrangements under the AFS licensing regime .96Uncompensated consumer losses .97Last resort compensation scheme.98Legal advice for victims of misconduct .99FSocial impacts of consumer protection failures in the sector .100GPrioritising consumer protection .101Law reform .101Current reviews to improve consumer protection .102Banking industry reform .102ASIC surveillance projects .103Appendix 1: ASIC surveillance projects .104Appendix 2: Law reform and change processes .106Appendix 3: Government reviews and inquiries .110Appendix 4: Banking industry initiatives .113Appendix 5: 2016–17 ASIC business plan summaries .115Appendix 6: What good looks like for the sectors we regulate .126Key terms .128 Australian Securities and Investments Commission March 2017Page 2
Senate inquiry into consumer protection in the banking, insurance and financial sector: Submission by ASICOverview1ASIC makes this submission to assist the Senate Economics ReferenceCommittee with its inquiry into consumer protection in the banking,insurance and financial services sector.ASIC’s role in the financial system2As Australia’s corporate, markets, financial services and consumer creditregulator, ASIC strives to ensure that Australia’s financial markets are fairand transparent and supported by confident and informed investors andfinancial consumers.3The Australian Securities and Investments Commission Act 2001 (ASIC Act)requires ASIC to:4(a)maintain, facilitate and improve the performance of the financial systemand entities in it;(b)promote confident and informed participation by investors and financialconsumers in the financial system;(c)administer the law effectively and with minimal proceduralrequirements;(d)enforce and give effect to the law;(e)receive, process and store, efficiently and quickly, information that isgiven to us; and(f)make information about companies and other bodies available to thepublic as soon as practicable.We use a range of regulatory tools to enforce and promote compliance withthe laws that we administer, and improve consumer understanding anddecision making. The regulatory tools available to us include:(a)Education—undertaking educational activities, including financialliteracy work.(b)Guidance—providing guidance to industry about how we willadminister the law to provide clarity to industry participants about theirobligations under the law. We achieve this by issuing regulatory guides,consultation papers, reports and information sheets.(c)Surveillance— gathering and analysing information on a specific entityor range of entities, a transaction, a specific product or issue of concernin the market to test compliance with the laws we administer and look atconsumer and investor outcomes. After a surveillance, we may publishour findings to inform the market or take further action, such as Australian Securities and Investments Commission March 2017Page 3
Senate inquiry into consumer protection in the banking, insurance and financial sector: Submission by ASICcommencing an investigation with a view to carrying out enforcementaction.(d)Negotiated outcomes—these may arise from surveillances or frominvestigations, and include enforceable undertakings. An enforceableundertaking is a written undertaking given to us that an entity or personwill operate in a certain way. It is a flexible and effective remedy inimproving compliance with the law and may be enforced through thecourts.(e)Enforcement action—we undertake investigations, which may lead toenforcement action such as:(i)criminal action;(ii)civil action, such as civil penalty proceedings (e.g. for breach ofdirectors’ duties), corrective action (e.g. to correct misleadingdisclosure) and compensatory action (to recover compensation onbehalf of consumers); and(iii)administrative action (e.g. banning or disqualifying persons fromthe financial services industry).See Information Sheet 151 ASIC’s approach to enforcement (INFO 151) for furtherinformation.5Our vision is to allow markets to fund the economy and in turn, economicgrowth in order to contribute to the financial wellbeing of all Australians.We do this by:(a)promoting investor and consumer trust and confidence;(b)ensuring fair and efficient markets; and(c)providing efficient registration services.6Understanding the behaviour of investors, consumers and gatekeepers iscentral to our approach. Financial decisions can be influenced by people’slevel of financial literacy and behavioural biases while culture, incentivesand deterrence are some of the key factors driving individual and firmbehaviours within the sectors we regulate.7Gatekeepers play a crucial role in the overall health of the financial system.Their conduct influences the level of trust and confidence that investors andconsumers can have in the financial system.8One of the ways in which we work to address the potential impact onconsumers of misconduct in the financial services sector is to equip themwith the knowledge and skills to make informed choices and avoid financialtraps and pitfalls.9Building Australians’ financial capability plays a vital role in promotinggreater economic participation and supports ASIC’s strategic priority of Australian Securities and Investments Commission March 2017Page 4
Senate inquiry into consumer protection in the banking, insurance and financial sector: Submission by ASICbuilding investor and financial consumer trust and confidence. ASIC is theAustralian Government agency responsible for financial literacy and in thatrole, leads and coordinates the National Financial Literacy Strategy (NFLS),in line with international best practice.ASIC’s areas of focus10This submission provides a summary of our recent work identifying,reporting on and seeking to address a range of significant market andconduct problems in banking, credit, financial services and insurance. ASIChas and continues to be very active in these areas.11Our capacity to address problems has been enhanced by recent reforms suchas the Future of Financial Advice (FOFA) reforms and will be furtherstrengthened by the wide range of reforms currently in train.12As outlined in our Corporate Plan 2016–17 to 2019–20 (Corporate Plan2016–17), we have identified our long-term challenges as: balancing a freemarket-based system with investor and financial consumer protection; digitaldisruption; structural change; financial innovation-driven complexity; andglobalisation. We also recognise a number of key risks that flow from thesechallenges, including: gatekeeper conduct; misalignment of retail productdesign and distribution with consumer understanding; and cross-borderbusinesses, services and transactions.13Our Corporate Plan 2016–17 also outlines our view of ‘what good lookslike’ for the various sectors we regulate: see Appendix 6. A key theme thatunderpins our view for each sector is the importance of organisationalculture and collective industry norms and practices on the behaviour andconduct of the firms we regulate and the individuals that work within thesefirms.14Complexity driven by financial innovation is one of our long termchallenges. Over the next four years, we will focus on products, services anddistribution models that pose the highest risks to investors and consumers.15In addition, we will focus on:(a)behavioural insights—by identifying opportunities to apply decisionsciences across our regulatory work;(b)financial capability—by overseeing the NFLS; through the formaleducation sector; increasing the use of free impartial information, toolsand guidance; and strengthening partnerships; and(c)government reforms—by supporting initiatives relating to the FinancialSystem Inquiry (FSI). Australian Securities and Investments Commission March 2017Page 5
Senate inquiry into consumer protection in the banking, insurance and financial sector: Submission by ASIC16Our work in the financial advice sector centres on improving the quality offinancial advice. Poor financial advice can undermine investor and consumertrust and confidence in the financial system. We work to improve the qualityof financial advice by addressing conflicted advice, misaligned incentivesand inadequate risk management, removing ‘bad apple’ advisers and takingother regulatory action where advice is not in the client’s best interests.17ASIC’s work in the deposit-takers, credit and insurers sector addressesconduct by credit licensees (lenders and intermediaries) and insuranceproviders and intermediaries. Our work promotes responsible lendingpractices and addresses the sale of inappropriate products to consumers. It iscritical that lenders and insurers do not sell consumers unsuitable productsthat could put them at risk of experiencing substantial financial hardship.18Our work in the managed funds and superannuation sector focuses onconduct by responsible entities and superannuation trustees. Investor andconsumer trust and confidence in our financial system is undermined whenpoor gatekeeper culture and incentives lead to investors being treatedunfairly. This can result in significant losses for investors, particularly ofretirement savings in the funds management sector. Our work focuses onpreventing wrongdoing in this area.Importance of current law reform processes19There are currently a number of law reform processes and reviews underwayin relation to the regulatory framework for protecting consumers and smallbusinesses in the banking, insurance and financial services sector.20Current reform processes include:(a)creating product design and distribution obligations for product issuersand distributors, and product intervention powers to provide ASIC witha more flexible regulatory toolkit;(b)enhancing ASIC’s licensing powers, including the ability to banindividuals from managing a licensee;(c)reviewing our enforcement regime, including penalties and the financialservices licensing breach notification framework;(d)including competition in ASIC’s mandate;(e)introducing new professional, education and training standards forfinancial advisers;(f)better aligning the interests of financial advice providers in the lifeinsurance sector with those of consumers; and Australian Securities and Investments Commission March 2017Page 6
Senate inquiry into consumer protection in the banking, insurance and financial sector: Submission by ASIC(g)further reforms in relation to small amount (payday) lending contracts.A more complete list of current reforms is attached at Appendix 2.21In addition, there are a number of significant reviews underway, includingthe review of the financial system external dispute resolution framework(EDR Review) which will also consider the merits of a last resortcompensation scheme and the Productivity Commission’s work onsuperannuation and, in the future on competition in banking and financialservices. A full list of current reviews is attached at Appendix 3.22We consider it important that these reviews proceed and law reformprocesses are implemented expeditiously to ensure the framework andregulatory settings are right and that ASIC has the tools we need to regulatea financial system that is fair, efficient and resilient.23Significantly, the additional funding support for ASIC announced by theGovernment in April 2016 will support us to deter misconduct through moreproactive surveillances that target poor practices—at the individual firm andindustry level – within the financial advice, superannuation and managedfunds, credit and insurance sectors.Note: See the Hon Scott Morrison MP, Treasurer of the Commonwealth of Australiaand the Hon. Kelly O’Dwyer MP Minister for Small Business and Assistant Treasurer,Turnbull Government bolsters ASIC to protect Australian consumers, media release,20 April 2016.24We will work closely with the Government on the key areas of law reformfrom the FSI, including financial product intervention powers and design anddistribution obligations; banning of individuals from managing financialfirms; and strengthening our licensing and enforcement regimes.Outline of submission25This submission sets out:(a)failures in current laws, regulatory framework and enforcement in thebanking, insurance and financial services sector (Part A);(b)impact of misconduct in the sector on victims and consumers (Part B);(c)impact of remuneration, incentive-based commission structures, andfee-for-no-service or recurring fee structures on consumers (Part C);(d)culture and chain of responsibility in relation to misconduct (Part D);(e)redress, compensation and legal advice available to victims ofmisconduct (Part E);(f)social impacts of consumer protection failures in the sector (Part F); and Australian Securities and Investments Commission March 2017Page 7
Senate inquiry into consumer protection in the banking, insurance and financial sector: Submission by ASIC(g)26options to support the prioritisation of consumer protection within thesector (Part G).Appendices are also attached to this submission setting out:(a)ASIC surveillance projects in the sector (Appendix 1);(b)significant law reform processes currently underway (Appendix 2);(c)recent and current government reviews in the banking, insurance andfinancial services sector (Appendix 3);(d)banking industry initiatives and change processes to improve consumeroutcomes (Appendix 4);(e)ASIC’s 2016-17 business plan summaries of the financial advice,deposit takers, credit and insurance, and superannuation and managedfunds stakeholder teams (Appendix 5); and(f)an outline of ‘what good looks like’ for the sectors we regulate(Appendix 6). Australian Securities and Investments Commission March 2017Page 8
Senate inquiry into consumer protection in the banking, insurance and financial sector: Submission by ASICAFailures in current laws, regulatory frameworkand enforcementKey pointsIn this section we outline: recommendations from the FSI and key areas for reform; our work to address issues in the financial services sector, namely inrelation to financial advice, life insurance, general insurance, consumercredit, small business, non-cash payments, superannuation and fundsmanagement; external dispute resolution (EDR) framework; and enforcement and ASIC’s regulatory toolkitRecommendations of the Financial System Inquiry27We proposed several key areas for reform in our submissions to the FSI, theoverall aim of which was to ensure that ASIC can more effectivelycontribute to a financial system that meets the needs of Australianhouseholds and businesses into the future. This is consistent with our vision.28The FSI made recommendations consistent with our proposals for these keyareas for reform, and the Government subsequently responded positively tothose recommendations, including:29(a)creating product design and distribution obligations for product issuersand distributors, and product intervention powers to provide ASIC witha more flexible regulatory toolkit;(b)enhancing ASIC’s licensing powers, including the ability to banindividuals from managing a licensee;(c)reviewing ASIC’s enforcement regime, including penalties and thefinancial services licensing breach notification framework;(d)including competition in ASIC’s mandate; and(e)implementing an industry funding model for ASIC and the removal ofASIC from the Public Service Act 1999.Below we outline some of the reform issues we raised in our submissions tothe FSI. Australian Securities and Investments Commission March 2017Page 9
Senate inquiry into consumer protection in the banking, insurance and financial sector: Submission by ASICMore flexible regulatory toolkit30The FSI highlighted past instances where ASIC lacked a broad toolkit torespond effectively and in a timely way to an emerging risk of significantconsumer detriment. A more flexible regulatory toolkit for ASIC will ensurebetter market outcomes with less cost for industry. This could beaccompanied by a reduction in some current disclosure requirements that areless effective.31The FSI recommended the introduction of:(a)a product intervention power for ASIC—to enable us to respond tomarket problems in a flexible, targeted, effective and timely way; and(b)product design and distribution obligations—effectively a ‘productgovernance’ framework to strengthen issuer and distributoraccountability for ensuring that products are designed with consumerneeds in mind and are marketed at appropriate sections of thepopulation.32Current reforms to implement these recommendations represent afundamental shift away from relying solely on disclosure to drive goodconsumer outcomes, and are directed at achieving the FSI’s fairnessobjective for the financial system.33The new power will enhance ASIC’s regulatory toolkit and enable us to takedirect action to deal with significant shortcomings in products or conductthat result in consumer detriment. In addition, the new obligations willenhance accountability for issuers and distributors of financial products(including banks and insurers) and reduce the number of consumers who aresold products that do not meet their needs or are otherwise inappropriate.The obligations will also compel financial services firms to be morecustomer-focused when designing and distributing products.34The reforms will significantly impact both industry and ASIC. Consultationwill ensure that the product intervention power is clearly defined andappropriately targeted. We would also provide guidance on the interventionpower and the obligations.35We welcome these reforms; however, we consider that the measuressuggested in the proposals paper could go further to achieving the FSI’sobjective of fairness for consumers. In our submission to a proposals paperon implementation of the reforms, we suggested that the product interventionpower should:(a)cover all financial products as defined in Div 2 of Pt 2 of the ASIC Act,being the full range of financial and credit products within ASIC’sregulatory remit, rather than the narrower suggested scope of financialproducts regulated under the Corporations Act 2001(Corporations Act) Australian Securities and Investments Commission March 2017Page 10
Senate inquiry into consumer protection in the banking, insurance and financial sector: Submission by ASICand credit products regulated under the National Consumer CreditProtection Act 2009 (National Credit Act);36(b)be broad enough to allow interventions to be tailored to the specificcircumstances of different market problems—such as the remunerationof distributors, training obligations and dispute resolution—rather thanthe narrower range of interventions suggested which excludes certaintypes of interventions that are not linked to a product feature. Inparticular, the proposals paper excludes interventions relating toconflicting remuneration arrangements and the need for staff training,issues which have been central to many of the worst problems in thesector in recent years; and(c)be flexible enough to implement longer-term solutions (wherenecessary) to facilitate changes to address market problems, rather thanthe approach suggested for all interventions to lapse after 18 monthswith no ability to be extended, regardless of the circumstances.In relation to the product governance aspect of the reforms, the proposalspaper suggests that only products regulated under the Corporations Act(other than ordinary shares) would be subject to these obligations. We haveoutlined our support for a broad application of the design and distributionobligations to all ASIC Act products (other than ordinary shares), includingcredit products under the National Credit Act. In suggesting this, weacknowledge that the content of the obligations may differ where otherregulations, such as responsible lending obligations, are in place.Inclusion of competition in ASIC’s mandate37The FSI recommended periodic reviews by the Productivity Commission ofcompetition in the financial system and consideration of competition in ourmandate. In response, the Government agreed to strengthen the focus oncompetition in the financial system by explicitly including consideration ofcompetition in ASIC’s mandate.38Requiring us to formally consider the effect of our decision making oncompetition would drive a greater focus on the long-term benefits for the endusers of the financial system. While including this mandate would not makeASIC a competition regulator, it would help ensure that our approach toregulation considered market-wide effects more explicitly.39We are currently working with the Council of Financial Regulators (CoFR)to better consider competition issues in the financial system, and are alsoliaising with the Government on the development of a competition mandate.40How ASIC implements a competition mandate will depend on the mandate’sscope and form. We support a mandate that enables us, in the long-terminterests of consumers or end users, to: Australian Securities and Investments Commission March 2017Page 11
Senate inquiry into consumer protection in the banking, insurance and financial sector: Submission by ASIC(a)promote competition in regulated financial markets and services,including factoring competition into our regulatory decision making;and(b)use our existing functions and powers (including information-gatheringpowers) to consider whether competition is working effectively in themarkets we regulate.41To the extent possible, we currently consider competition when carrying outour work. For example, our ‘Innovation Hub’ helps support start-ups withinnovative new business models for providing financial products andservices navigate our regulatory system.42We also support the FSI recommendation for the Productivity Commissionto review competition in the financial system. We note that in thesuperannuation area, the Productivity Commission is reviewing alternativemodels for allocating default fund members to products and will commencea general review of competition in superannuation in the second half of2017.Product intervention powers and competition in financial services43There is a close link between competition considerations and a productintervention power for ASIC. Providing us with a competition mandate andproduct intervention powers will enable us to be a more proactive andeffective regulator. A competition mandate would allow us to consider andaddress consumer detriment more broadly—we would not need to rely onspecific concerns in relation to legislative compliance to consider marketfailures causing poor conduct and consumer detriment. We would be able touse the proposed product intervention powers to directly address suchmarket failures.44Product intervention powers are intended to allow us to intervene to addressmarket failure. That is where, due to the way the market is operating, aparticular product or service produces consistently poor consumer outcomes.This market failure is despite formal compliance with applicable laws (e.g.such as being licensed, providing compliant disclosure, etc.).45Often the market failure will be related to competition working ineffectivelyor negatively, such as due to supply side competition. For instance, flexcommissions on car finance arranged through car yards and commissionspaid to sellers of consumer credit insurance (CCI) to small business areexcessively high. In both instances the need to compete compels productproviders to pay commissions in a form or size with which they areuncomfortable, and which result in very poor consumer outcomes (e.g. carfinance at higher interest rates than the lender was actually willing toprovide, or inflated premiums on CCI). Australian Securities and Investments Commission March 2017Page 12
Senate inquiry into consumer protection in the banking, insurance and financial sector: Submission by ASIC46There are generally two issues preventing industry from taking the initiativeto solve the problem:(a)first mover disadvantage—for instance, if one entity ceased to pay flexcommissions, it would lose market share to other entities who continuedto pay them because, whilst not in the consumers’ interests, flexcommissions are in the interest of the intermediary and the intermediarydistributes the product; and(b)rules against anti-competitive behaviour often mitigate against industrygetting together to agree not to engage in the conduct involved.47The best interventions will promote competition in the interests of the endusers of the products and services. The current absence of competitionconsiderations from our mandate limits our ability to take competitionimpacts into account across our work.48Therefore, ASIC having a mandate that includes competition considerationsin the range of factors we need to take into account is very closely alignedwith the proposed product intervention power.Improving standards in financial advice49With compulsory superannuation, there is a critical need for accessible andsound financial advice. During the FSI, we proposed a package of reformsthat include a consistent minimum competency standard for advisers, acomprehensive national register of advisers, and the ability for the regulatorto ban managers of advice businesses that cause consumers major harm.50The FSI recommended the Government should continue to raise theminimum competency standards for financial advisers and introduce anenhanced register of advisers.51On 9 February 2017, the Corporations Amendment (Professional Standardsof Financial Advisers) Bill 2016 was passed unanimously by both houses ofParliament. The Act introduces new professional, education and trainingstandards for financial advisers providing personal advice on more complexfinancial products. Refer to paragraphs 99–105 for further information.52ASIC launched the Financial advisers register on the MoneySmart websiteon 31 March 2015. We see this register as an important reform. Seeparagraphs 107–110.53The current review of ASIC’s enforcement regime is considering extendingour banning power to ban individuals from managing the provision offinancial services. Refer to paragraphs 388–397 for more details on theASIC Enforcement Review. Australian Securities and Investments Commission March 2017Page 13
Senate inquiry into consumer protection in the banking, insurance and financial sector: Submission by ASICEnsuring the superannuation system better meets theneeds of the retirement phase54As the Australian population ages, better products are needed to help peoplemanage their retirement savings during the retirement phase. There is also agreater need for good quality retirement advice. We proposed during the FSIthat options should be explored to encourage product prov
insurance and financial services sector. ASIC's role in the financial system 2 As Australia's corporate, markets, financial services and consumer credit regulator, ASIC strives to ensure that Australia's financial markets are fair and transparent and supported by confident and informed investors and financial consumers. 3 The
May 02, 2018 · D. Program Evaluation ͟The organization has provided a description of the framework for how each program will be evaluated. The framework should include all the elements below: ͟The evaluation methods are cost-effective for the organization ͟Quantitative and qualitative data is being collected (at Basics tier, data collection must have begun)
On an exceptional basis, Member States may request UNESCO to provide thé candidates with access to thé platform so they can complète thé form by themselves. Thèse requests must be addressed to esd rize unesco. or by 15 A ril 2021 UNESCO will provide thé nomineewith accessto thé platform via their émail address.
̶The leading indicator of employee engagement is based on the quality of the relationship between employee and supervisor Empower your managers! ̶Help them understand the impact on the organization ̶Share important changes, plan options, tasks, and deadlines ̶Provide key messages and talking points ̶Prepare them to answer employee questions
Chính Văn.- Còn đức Thế tôn thì tuệ giác cực kỳ trong sạch 8: hiện hành bất nhị 9, đạt đến vô tướng 10, đứng vào chỗ đứng của các đức Thế tôn 11, thể hiện tính bình đẳng của các Ngài, đến chỗ không còn chướng ngại 12, giáo pháp không thể khuynh đảo, tâm thức không bị cản trở, cái được
Le genou de Lucy. Odile Jacob. 1999. Coppens Y. Pré-textes. L’homme préhistorique en morceaux. Eds Odile Jacob. 2011. Costentin J., Delaveau P. Café, thé, chocolat, les bons effets sur le cerveau et pour le corps. Editions Odile Jacob. 2010. Crawford M., Marsh D. The driving force : food in human evolution and the future.
Le genou de Lucy. Odile Jacob. 1999. Coppens Y. Pré-textes. L’homme préhistorique en morceaux. Eds Odile Jacob. 2011. Costentin J., Delaveau P. Café, thé, chocolat, les bons effets sur le cerveau et pour le corps. Editions Odile Jacob. 2010. 3 Crawford M., Marsh D. The driving force : food in human evolution and the future.
MARCH 1973/FIFTY CENTS o 1 u ar CC,, tonics INCLUDING Electronics World UNDERSTANDING NEW FM TUNER SPECS CRYSTALS FOR CB BUILD: 1;: .Á Low Cóst Digital Clock ','Thé Light.Probé *Stage Lighting for thé Amateur s. Po ROCK\ MUSIC AND NOISE POLLUTION HOW WE HEAR THE WAY WE DO TEST REPORTS: - Dynacó FM -51 . ti Whárfedale W60E Speaker System' .
Glossary of Social Security Terms (Vietnamese) Term. Thuật ngữ. Giải thích. Application for a Social Security Card. Đơn xin cấp Thẻ Social Security. Mẫu đơn quý vị cần điền để xin số Social Security hoặc thẻ thay thế. Baptismal Certificate. Giấy chứng nhận rửa tội