Defined Terms and Documents       

MEMORANDUM OF UNDERSTANDING  -  AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION AND RESERVE BANK OF AUSTRALIA

ASIC Has Ignored Its Acknowledgement In 2010 That These Findings Have Implications For Our Regulatory Regime webpage notes in ASIC Report 224 "Access to financial advice in Australia" - Dec 2010 that ASIC et al have known at least since Dec 2010.  Below is an extract from the footnote on page 16.:

"15 As part of an international study, the ABS measured skills in document literacy, prose literacy, numeracy and problem solving and found that approximately 7 million (46%) of Australians (and 7.9 million (53%) of Australians aged 15 to 74) had proficiency less than ‗the minimum required for individuals to meet the complex demands of everyday life and work emerging in the knowledge-based economy‘ for document literacy and numeracy respectively‘, Australian Bureau of Statistics, Adult literacy and life skills survey results, cat. no. 4228.0, ABS, Canberra, 2006, p. 5.

16 These findings have implications for our regulatory regime, which relies upon disclosure as a critical element of our consumer protection system."

Extracts from Payment, clearing and settlement systems in Australia - 2011:

ASIC was established on 1 July 1998.  It has responsibility for market integrity and consumer protection across the financial system, including payment transactions. It administers the Corporations Act 2001 and regulates Australian corporations, financial markets, clearing and settlement facilities (in conjunction with the RBA ¡V see Section 1.2.2) and financial service providers. The functions of ASIC include -
A.    the oversight of financial market and clearing and settlement facility licensees,
B.    licensing of financial service providers (securities dealers and advisers),
C.    registration of auditors and liquidators, and
D.    investigating and enforcing corporate and securities law.  A Memorandum of Understanding sets out a framework for cooperation between ASIC and the RBA.

The Australian Securities and Investments Commission (ASIC) has responsibility for market integrity and consumer protection across the financial system, including payment transactions.  ASIC and the RBA both have responsibilities in relation to clearing and settlement facilities. A Memorandum of Understanding sets out a framework for cooperation between the two regulators in this area.

ASIC’s compulsory information gathering powers notes 'inter alia':

"As Australia’s corporate, markets, financial services and consumer credit regulator, we strive to ensure that Australia’s financial markets are fair and transparent, and supported by confident and informed investors and consumers. We do this by monitoring compliance with the law and taking enforcement action where necessary. We also provide services to businesses and individuals through our registry, licensing and Client Contact Centre facilities, which handle requests, inquiries and complaints from consumers and businesses.

Parliament has given ASIC a range of compulsory information-gathering powers to enable us to require a person or entity to:

• provide us with documents and information; and

• attend an examination to answer questions and/or provide reasonable assistance."

Below is an extract from page 7 of "Essential Banking Law and Practice":

"Consumer protection in financial services: ASIC’s role

The role, powers and responsibilities of ASIC are set out in the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act). They include the power to regulate Unconscionable Conduct and consumer protection in the financial services industry, contained in Part 2 Division 2. It is important to be aware that the consumer protection provisions contained in Part IVA and Part V of the Trade Practices Act 1974 (Cth) (Trade Practices Act) no longer apply to financial services.22  This means that when considering bringing claims for misleading or deceptive conduct or Unconscionable Conduct, you will need to refer to and plead the relevant provisions in the ASIC Act.  For example, the prohibition against misleading or deceptive conduct by a financial services provider is s12DA of the ASIC Act, not s52 of the Trade Practices Act."

Consumer advocates back expanded powers for ASIC to probe banks  June 1, 2015:

"Consumer law advocates have written to Assistant Treasurer, Josh Frydenberg, encouraging him to support new powers to allow the corporate regulator to enter financial services firms and intervene on the design or distribution of products that might harm customers. 

The financial system inquiry chaired by David Murray recommended the government give so-called product intervention powers to the Australian Securities and Investments Commission to "enhance the regulatory toolkit available where there is risk of significant consumer detriment". ASIC requested the powers in its submissions to the inquiry pointing to similar ones for Britain's Financial Conduct Authority (FCA). 

Mr Frydenberg has been closely looking at the inquiry's recommendation after visiting the FCA in January, where the powers were discussed. On Friday, Mr Frydenberg said the government would respond to the inquiry "over the course of 2015". 

Banking sources said the government's position on product intervention powers will be one of the most closely watched issues in that response.

The Australian Bankers' Association has no principled objection to the recommendation but has expressed concerns to the government about the potential for the powers to be abused in practice. 

In his letter to the Assistant Treasurer, Gerard Brody, the chief executive of the Consumer Action Law Centre, which is a member of ASIC's Consumer Advisory Panel, argued the powers would allow the regulator to act before consumers were harmed. This would be an improvement to the status quo, where ASIC needs to wait for a breach of the law by a particular institution to occur before acting.

He also called for the powers to be broad and apply not only to investment products but consumer leases, payday loans, and add-on insurance." 

Extract from COUNCIL OF FINANCIAL REGULATORS ANNUAL REPORT - 2001

The Council of Financial Regulators is the co-ordinating body for Australia’s main
financial regulatory agencies:
*        Reserve Bank of Australia (RBA), which chairs the Council;
*        Australian Prudential Regulation Authority (APRA); and
*        Australian Securities and Investments Commission (ASIC).

The Council’s role is to contribute to the efficiency and effectiveness of financial regulation by providing a high-level forum for co-operation and collaboration among its members. It operates as an informal body in which members are able to share information and views, discuss regulatory reforms or issues where responsibilities overlap and, if the need arises, co-ordinate responses to potential threats to financial stability. These arrangements provide a flexible, low-cost approach to co-ordination among the main financial regulatory agencies. The Council is non-statutory and has no regulatory functions separate from those of its members.

Why does the Payments System Board of the Reserve Bank believe that it has no regulatory power to seek Credit Card Issuers to provide financial data which identify the demographic cohorts that contribute 80% circa of Interest And Penalty Fees Revenue?  

News Daily article "How predatory banks are hooking credit cards customers" Aug 27, 2015 notes:

"In recent years ASIC has taken enforcement action against three credit card issuers – GE Money, Commonwealth Bank and Westpac – for breaches of responsible lending laws.  Both Commonwealth Bank and Westpac were caught sending unsolicited invitations to credit card customers to raise their debt limits.  Such marketing tactics were prohibited under responsible lending reforms introduced in 2012."

            `ASIC is responsible for .............. monitoring and promoting market integrity and consumer protection in relation to the Australian financial system, the provision of financial services and the payment system."

ASIC boost: Big companies to pay $330m a year to fund regulator - SMH  - APRIL 20 2016 includes that ASIC will be self-regulating within two years:

"But in two years, banks, super funds, insurance companies and publicly listed companies will cover ASIC's budget - now about $330 million a year - delivering a saving to the budget bottom line of more than $1 billion over the four years from 2018-19."

The origins of APRA - Fact Sheet 2 notes:

• ASIC regulates 1.36 million Australian companies, 6529 company auditors, roughly 3853 financial services businesses and 3765 managed investment schemes, and eight financial markets including the Australian Stock Exchange (ASX) and the Sydney Futures Exchange.^{14 circa}

See:

Navigating the new Framework - APRA, RBA, ASIC and ACCC