Use Now, Regulate Later?

Twin Peaks The Legal and Regulatory Anatomy of Australia's System of Financial Regulation

Australia adopts a functionally-based model – the ‘twin peaks’ model – under which the functions for financial regulation are consolidated into two regulators: the Australian Securities and Investments Commission (ASIC), which is responsible for the regulation of companies, market conduct and consumer protection; and the Australian Prudential Regulation Authority (APRA), which is responsible for prudential regulation. This paper examines the anatomy of the Australian twin peaks model from a legal and regulatory perspective. It also reflects on the work of the Financial System Inquiry (FSI) of 2014, which reviewed Australia’s financial system and examined issues that are relevant to the operation of the twin peaks model.

<p>This dissertation examines the statutory protection of elderly consumers in rest homes and makes several proposals of how to improve their protection. The dissertation compares New Zealand’s legislation with the existing rest home related legislation in Australia and Germany to improve New Zealand’s regulations. At first, the dissertation characterises elderly consumers as a consumer group with special vulnerabilities. According to the dissertation several reasons can be identified, which justify regulatory intervention in favour of the elderly. Secondly, the dissertation gives an overview of the relevant rest home legislation in New Zealand, Australia and Germany. In the later chapters the dissertation examines the existing information obligations, and the statutory protection of elderly consumers during the implementation and at the time of the termination of a rest home contract. The author argues that many of the existing consumer protection measures are not specifically tailored for consumers in rest homes and, therefore, do not ensure comprehensive protection. Furthermore, the author identifies several gaps in protection and proposes to introduce targeted new protection measures to close these gaps. Subsequently, the dissertation considers the access to justice for elderly consumers. The author states that the existing system offers some advantages but is far from being perfect. He speaks in favour of establishing a new Commissioner who is responsible for the issues of elderly consumers and the enhancement of their legal position. Lastly and on the basis of the previous outcomes, the author recommends creating a new piece of legislation specifically tailored for the protection of elderly consumers in rest homes to implement all the proposed changes. In the author’s opinion a new Act could build on the existing consumer protection measures but should also improve them to ensure the best protection possible. The author also outlines how a code of practice should be put in place, which sets out minimum requirements.</p>

<p>This dissertation examines the statutory protection of elderly consumers in rest homes and makes several proposals of how to improve their protection. The dissertation compares New Zealand’s legislation with the existing rest home related legislation in Australia and Germany to improve New Zealand’s regulations. At first, the dissertation characterises elderly consumers as a consumer group with special vulnerabilities. According to the dissertation several reasons can be identified, which justify regulatory intervention in favour of the elderly. Secondly, the dissertation gives an overview of the relevant rest home legislation in New Zealand, Australia and Germany. In the later chapters the dissertation examines the existing information obligations, and the statutory protection of elderly consumers during the implementation and at the time of the termination of a rest home contract. The author argues that many of the existing consumer protection measures are not specifically tailored for consumers in rest homes and, therefore, do not ensure comprehensive protection. Furthermore, the author identifies several gaps in protection and proposes to introduce targeted new protection measures to close these gaps. Subsequently, the dissertation considers the access to justice for elderly consumers. The author states that the existing system offers some advantages but is far from being perfect. He speaks in favour of establishing a new Commissioner who is responsible for the issues of elderly consumers and the enhancement of their legal position. Lastly and on the basis of the previous outcomes, the author recommends creating a new piece of legislation specifically tailored for the protection of elderly consumers in rest homes to implement all the proposed changes. In the author’s opinion a new Act could build on the existing consumer protection measures but should also improve them to ensure the best protection possible. The author also outlines how a code of practice should be put in place, which sets out minimum requirements.</p>

This working paper reports the findings of a detailed empirical study of 414 enforceable undertakings accepted by the Australian Securities and Investments Commission (ASIC), the corporate, market, finance and credit services regulator from July 1998 to 31 December 2015, a period of 17.5 years. The study is unique in size, scope and comprehensiveness. It presents a detailed profile of all parties giving enforceable undertakings and the misconduct issues in their undertakings over a 17.5 year period; and breaks new ground by offering the first empirical analysis of the core commitments or undertakings given by parties to enforceable undertakings to rectify their misconduct. It constructs a much needed road map through the maze of regulated firms, activities, misconduct and undertakings involved in ASIC’s deployment of enforceable undertakings.

Civil penalties were introduced into the corporations legislation in 1993. They were seldom used initially. Only 14 civil penalty actions were commenced by the corporate regulator in the first six years. Over the past three decades, the civil penalty regimes which the Australian Securities and Investments Commission (‘ASIC’) enforces have significantly expanded. To understand the impact of these changes, the authors analyse a dataset of all ASIC’s civil penalty actions that were finalised for the 10-year period from 2013 to 2022. Based on this analysis, the authors argue that civil penalty actions have now become a very significant part of ASIC’s enforcement strategy. The authors also discuss other aspects of ASIC’s use of civil penalties, including ASIC’s success rate in this type of litigation, the characteristics of the defendants, the most common claims made by ASIC in civil penalty proceedings and the orders most often imposed by the courts. The authors identify possible reasons for their findings.

An Empirical Analysis of the Use of Enforceable Undertakings by the Australian Securities and Investments Commission between 1 July 1998 and 31 December 2015

As Australia's population ages, increasing numbers of seniors move to a growing number of retirement villages. Unlike time shares, which are ‘managed investment schemes’ and therefore regulated as ‘financial products’ under corporate law administered nationally by the Australian Securities and Investments Commission (ASIC), the Commonwealth withdrew from the regulation of retirement villages in the 1980s on the basis that at that time they were local, usually run by religious bodies and charities and were not of national concern. The regulation of retirement villages was taken over by the states and territories under their non-uniform Retirement Villages Acts and the common law. Until then retirement villages, often indistinguishable from Commonwealth regulated timeshares, were regulated in the original State and Territory Uniform Companies Acts in 1961 as ‘interests’, and then in later Commonwealth legislation as ‘prescribed interests’ by the forebear of ASIC, the then National Companies and Securities Commission (NCSC) with the State and Territory Corporate Affairs Commissions as its ‘delegates’. Today retirement villages, which are largely owned and managed by the corporate sector, raise many issues of national concern such as accountability, fees and the rights of residents. Some aspects of retirement villages such as directors’ duties, fundraising, prospectuses and unregistered schemes are regulated as corporations by ASIC under the Corporations Act 2001 (Cth), but retirement villages are not regulated as ‘financial products’ under corporate law.This article challenges the effectiveness of state and territory regulation of retirement villages and calls for federal regulation of retirement villages by bringing retirement villages into the definition of ‘financial product’ in the Corporations Act 2001 (Cth) and in the Australian Securities and Investments Commission Act 2001 (Cth). As financial products, retirement villages would then be regulated by Commonwealth legislation which deals with financial services and financial markets, as regulated by ASIC. These laws include consumer protection provisions such as the prohibition of misleading or deceptive conduct, unfair contract terms, unconscionable conduct, licensing and high standards for those in the retirement village industry. This would result in a return to Commonwealth leadership of the regulation of retirement villages to harmonise and to consolidate the current mix of state and territory regulation with federal legislation including an enforceable Retirement Villages Code of Conduct.

As Australia’s population ages, increasing numbers of seniors move to a growing number of retirement villages. Unlike time shares, which are ‘managed investment schemes’ and therefore regulated as ‘financial products’ under corporate law administered nationally by the Australian Securities and Investments Commission (ASIC), the Commonwealth withdrew from the regulation of retirement villages in the 1980s on the basis that at that time they were local, usually run by religious bodies and charities and were not of national concern. The regulation of retirement villages was taken over by the States and Territories under their non-uniform Retirement Villages Acts and the common law. Until then retirement villages, often indistinguishable from Commonwealth regulated timeshares, were regulated in the original State and Territory Uniform Companies Acts in 1961 as ‘interests’, and then in later Commonwealth legislation as ‘prescribed interests’ by the forebear of ASIC, the then National Companies and Securities Commission (NCSC) with the State and Territory Corporate Affairs Commissions as its ‘delegates’. Today retirement villages, which are largely owned and managed by the corporate sector, raise many issues of national concern such as accountability, fees and the rights of residents. Some aspects of retirement villages such as directors’ duties, fundraising, prospectuses and unregistered schemes are regulated as corporations by ASIC under the Corporations Act 2001 (Cth), but retirement villages are not regulated as ‘financial products’ under corporate law. This article challenges the effectiveness of State and Territory regulation of retirement villages and calls for federal regulation of retirement villages by bringing retirement villages into the definition of ‘financial product’ in the Corporations Act 2001 (Cth) and in the Australian Securities and Investments Commission Act 2001 (Cth). As financial products, retirement villages would then be regulated by Commonwealth legislation which deals with financial services and financial markets, as regulated by ASIC. These laws include consumer protection provisions such as the prohibition of misleading or deceptive conduct, unfair contract terms, unconscionable conduct, licensing and high standards for those in the retirement village industry. This would result in a return to Commonwealth leadership of the regulation of retirement villages to harmonise and to consolidate the current mix of State and Territory regulation with federal legislation including an enforceable Retirement Villages Code of Conduct.

Financial Services and Consumer Protection

The Use of Public Warning Notices by the Australian Securities and Investments Commission - Should the Law be Reformed?

Providing Financial Services 'Efficiently, Honestly and Fairly'

In August 2014, the Federal Court of Australia delivered a significant decision on the scope and application of new responsible lending laws for credit providers: 'Australian Securities and Investments Commission v The Cash Store Pty Ltd (in liquidation)' [2014] FCA 926 ('ASIC v The Cash Store'). The court found that there were numerous breaches of the responsible lending obligations by The Cash Store ('TCS'), a credit assistance provider (now in liquidation), and Assistive Finance Australia ('AFA'), a credit provider, when providing small, short-term loans (often known as payday loans) to consumers.

In Forge v Australian Securities and Investments Commission the High Court considered whether the appointment of acting judges to a state Supreme Court was constitutionally permissible. By a majority of six to one, the Court found that such appointments were constitutionally valid. The decision is an important illustration of the way that the ‘Kable principle', which works to maintain the institutional integrity of Australia's integrated system of courts, continues to evolve in Australian constitutional law. This casenote examines how the judgments in Forge v ASIC extend the Kable principle to cover the composition and structure of state courts, and seek to link the Kable principle with the text of the Constitution.

Consumers use financial intermediaries such as brokers and other credit advisers to navigate complex financial markets and to provide guidance on credit products. In 2017 ASIC reported that ‘[b]rokers … are responsible for arranging … half of all home loans in Australia’ (Australian Securities & Investments Commission, Report 516: Review of Mortgage Broker Remuneration (2017) 8 [18]). The National Consumer Credit Protection Act 2009 (Cth) (‘Credit Regime’) regulates the conduct of such advisers including requiring disclosure of fees and some commissions. The Credit Regime also permits conflicts between the interest of the adviser and the client, provided that the adviser has in place ‘adequate arrangements to ensure … [that the client is] … not disadvantaged by any conflict of interest’ and that the conflict does not breach the adviser’s obligation to act ‘efficiently, honestly and fairly’. This article demonstrates that equitable fiduciary obligations also operate to regulate the conduct of the adviser in his or her dealings with the client. Such conflict and other conduct may breach any equitable fiduciary obligation thus exposing the adviser to equitable remedies. Equitable fiduciary obligations may thus be an as yet under-exploited avenue of protection for consumers and a concomitant zone of compliance risk for those subject to the Credit Regime.