Australia: Regulatory update – 10 October 2022

By Jim Bulling and Hugo Chow

ASIC sues Latitude Finance Australia and Harvey Norman Holdings for allegedly misleading interest free advertising

ASIC is suing Latitude Finance Australia (Latitude) and Harvey Norman Holdings Ltd (Harvey Norman) over the promotion of interest-free payment methods.

ASIC alleges that advertisements which included “no deposit”, “interest free” payment options over specified terms for purchases at Harvey Norman were misleading as they did not disclose that consumers could only use these payment options if they applied for and used a Latitude GO Mastercard, and that Harvey Norman misrepresented the actual costs of these payment options as they did not adequately disclose the establishment fees and monthly account fees.

The government has welcomed potential policy responses to address the problem of de-banking in Australia

De‑banking is where a bank declines to offer or withdraws banking services to a customer, and it often occurs in relation to transaction accounts. De-banking is caused by a number of inter-related factors including AML/CTF laws, sanctions compliance, profitability and reputational risk considerations.

The Council of Financial Regulators’ paper on potential policy responses include suggestions to:

• collect de-banking data;
• introduce transparency and fairness measures;
• advise the major banks of the Government’s expectation that they provide guidance on their risk tolerance and requirements to the affected sectors; and
• consider funding capability uplift within the affected sectors.

ASIC’s reportable situations regime discussion paper

ASIC is consulting with industry participants in order to address the challenges that have come about regarding the current reportable situations regime.

ASIC has released a Discussion Paper setting out 22 issues and potential solutions which address some of the following:

1. circumstances in which related reportable situations should be grouped into a single report;
2. calculation of the number of reportable situations, the number of instances or the number of clients affected;
3. use of high level estimates for client financial loss or clients affected;
4. expectations for frequency of lodging updates;
5. quality of breach descriptions;
6. date the licensee first identified there may be a breach;
7. reporting on previous similar breaches; and
8. definition of ‘investigation complete’.

APRA: Super fund outsourcing can significantly impact member returns

APRA has released insights into how super trustees can improve the management of outsourcing arrangements.

In order to monitor and support the measurement of outcomes for members effectively, APRA says that better practice requires trustees to clearly define and measure service standards that balance value, quality and efficiency.

When super trustees assess the value for money of related-party service providers, APRA said that some trustees scoped their benchmarking activities too narrowly and therefore missed the opportunity to assess, challenge and improve the value obtained from certain outsourcing arrangements.