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ASIC releases second licensing activity report, plans licensing liaison meetings

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THE Australian Securities and Investments Commission (ASIC) has published its second report on its approach to licence applications and it has also released a meetings schedule to assist businesses in the financial services sector.

ASIC's Report 448, Overview of licensing and professional registration applications: January to June 2015 (REP 448), sets out recent regulatory outcomes achieved by ASIC in relation to Australian financial services (AFS) applications, Australian credit licence applications, liquidator registration applications, company auditor and approved SMSF auditor registration applications. 

ASIC deputy chairman Peter Kell said the report was part of ASIC’s ongoing commitment to providing greater public information about itsregulatory activities. ASIC’s first licensing activity report was published in May 2015.

"As we did in our first report, today’s report highlights ASIC’s continuing focus on retail OTC derivatives and marketplace lending, and also discusses the additional areas of digital (robo) advice, limited licensing, consumer leases and Centrepay, and ASIC’s recently announced Innovation Hub," Mr Kell said.

He gave a detailed breakdown of recent activities from January 1 to June 30, 2015:

  • ASIC assessed approximately 2050 applications, with 35% relating to a new licence application and the remaining 47% relating to variations to existing licence; 18% related to professional registration (liquidators and auditors).
  • Of the total number of applications assessed, 47% of these related to an Australian financial services (AFS) licence and 35% related to an Australian credit licence.
  • 48% of all applications assessed during this period were approved.
  • 57% of those approved were in a form other than as requested by the applicant (with 71% of these relating to an AFS licence and 46% related to a credit licence).
  • Nine AFS licences were suspended, 98 AFS licences were cancelled and 192 credit licences were cancelled.
  • ASIC assessed 369 applications for professional registration as liquidators and auditors.

LICENSING LIAISON MEETINGS

ASIC is organising meetings in Sydney on Monday, October 26, 2015 and Melbourne on Tuesday, October 27, 2015.

Licensing will also become a topic for discussion at ASIC’s regional liaison meetings in Adelaide, Brisbane, Hobart and Perth.

"We will be publishing an agenda for these meetings on our website and invitations will be sent out to our targeted audience of advisers and service providers shortly," Mr Kell said.

"We encourage people to attend as the meetings will provide insights into ASIC’s regulatory approach to its licensing and professional registration responsibilities.

"They will cover current topics relevant to the application for a licence and professional registration process.

"Senior staff will be available to present information and respond to questions," he said.

For details on the meetings and to RSVP to attend click here.

Download REP 448.

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Unfair contract legislation to finally help SMEs fight predatory financial institutions

THE Federal Government’s introduction of legislation to extend unfair contract terms (UCT) protections for consumers to small business is a step in the right direction, according to the Institute of Public Accountants (IPA).

Many small business failures over recent years have been triggered by actions from banks, finance companies and suppliers that would have been considered ‘unconscionable conduct’ if they had taken place in a pure consumer environment. Appeal channels such as financial ombudsman services have not extended to small businesses and companies. 

For thousands of small business people caught in these contracts, it has driven them to major personal financial loss and often destroyed their businesses.

“The IPA has long advocated for a fairer deal for small business when it comes to contracts and has voiced its concerns through the extensive consultation period with Treasury,” IPA chief executive officer, Andrew Conway said.

Under the new protections, a court will be able to strike out a term of a small business contract that it considers unfair.  Under these protections, a contract will be a small business contract if at least one party has fewer than 20 employees and its value is below the prescribed threshold of $100,000 (or $250,000 for a multi-year contract).

“While we would have preferred a higher ‘upfront price’, we believe the new protections will help small business in dealing with unconscionable conduct,” Mr Conway said.

“The IPA is of the opinion that the $100,000 threshold is insufficient as it significantly restricts the availability of the UCT provisions to small business and may lead to unjustifiable distinctions being drawn between consumer and business contracts. 

“The ‘take it or leave it’ rationale for reform can apply just as much to contracts over $100,000 as to those for less than this amount.

“The monetary limit is of particular concern to small businesses that make only a few large contracts each year rather than numerous smaller ones. For example, an agricultural producer selling an annual crop may have a series of contracts each with a value over $100,000.

“The existence of the monetary limit will also make it possible for a dominant firm to avoid the UCT provisions by aggregating the contracts it makes with a particular small business so they exceed that limit.

“However, there is no doubt that the government has taken a positive step forward in support of small businesses across Australia,” he said.

“The IPA applauds the legislation and looks forward to its passage and implementation.

“We will work with our members and small business to raise awareness of the benefits of this important legislation,” Mr Conway said.

www.publicaccountants.org.au

 

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Investor visa program could boost venture capital

EXTRA >>

TRADE and Investment Minister Andrew Robb has released a draft investment framework for an enhanced Significant Investor Visa Scheme (SIV) and design options for a new Premium Investor Visa (PIV) in an effort to boost investment into more dynamic sectors of the economy.

Mr Robb said as part of the government’s broader competitiveness agenda, these visa reforms aimed to drive investment into needy areas such as venture capital and small emerging companies. 

“The framework and design options were developed by Austrade following initial rounds of stakeholder consultation which attracted 68 written submissions,” Mr Robb said. 

“Under the existing SIV scheme, investment is directed largely into passive investments like government bonds.

“Applicants are required to make an investment of at least $5 million in complying investments for a minimum of four years. Under the proposed changes government bonds would no longer be a complying investment class.”

Mr Robb said the proposed complying investment framework for the SIV scheme included specifying that at least 20 percent ($1m) of the applicant’s $5m investment must flow into early stage, growth capital investments, through approved venture capital funds.

It would also specify that at least 30 percent ($1.5m) of the applicant’s investment must flow into emerging listed companies, through managed funds investing in small Australian stock exchange listed companies.

The changes would also reinforce existing rules banning direct investment into residential real estate, and introducing new measures to clamp down on indirect investment into residential real estate. A portion of funds will continue to be permitted to flow into commercial real estate, via managed funds.

Mr Robb said there were “enhanced measures” to improve protection for investors.

The Premium Visa scheme, he said, would require a minimum investment of $15 million and offer an accelerated 12-month pathway to citizenship.

This scheme will be more flexible in terms of investment class and will be aimed at attracting exceptional business people to Australia, including high-calibre entrepreneurs.

Mr Robb said investor visas offered a valuable prize which the government believed warranted investment in more dynamic and productive areas of the economy which experience capital constraints.

“These changes will attract more investment into high-growth companies and will support the commercialisation of great Australian research,” Mr Robb said.

“Our key objective is to see more investment into areas which support innovation and which provide new sources of growth capital, particularly in areas with thin capital flows.”

www.trademinister.gov.au

 

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CGW warns business over on privacy reform, one year on

BUSINESSES with annual turnover of more than $3 million, and those who offer payment terms of seven days or more, may be in the firing line if they are not compliant with new privacy laws.

That is the warning from lawyers Cooper Grace Ward, who have found that businesses non compliant with the Australian Privacy Principles could now face major penalties.

March 12 marked the first anniversary of the most significant changes to Australia’s privacy laws in over 25 years through amendments to the Privacy Act 1988 (Cth) – which  included the introduction of a new set of Australian Privacy Principles (APPs) and credit information obligations that now regulate the handling of personal information and credit information by most businesses and government agencies.

The amendments also introduced significant penalties of up to $340,000 (for individuals) or $1.7 million (for corporations) for breaches of certain provisions of the APPs and the Privacy Act.

Cooper Grace Ward partner Charles Sweeney said the Australian Privacy Principles applied to businesses with an annual turnover of more than $3 million, while some key obligations for affected businesses include having an up-to-date privacy policy “that is easily accessible and contains information about a number of mandatory matters”.

Mr Sweeney said if a business’s current privacy policy refers to the ‘National Privacy Principles’ it is likely its has not been updated and is not APP compliant.

The policy should also ensure that the business notifies individuals of certain privacy and information handling matters before collecting their personal information; and only collects personal information for permitted reasons. Once collected, the business must deal with the personal information in accordance with the APPs.

The policy must ensure the business does not use personal information for direct marketing purposes, unless an exception is satisfied; and takes steps before disclosing information to overseas recipients to ensure they do not breach the APPs – and this includes outsourcing operations and cloud computing.

The 2014 amendments to the Privacy Act also imposed new obligations on most businesses that defer payment for goods or services on terms of seven days or more regardless of annual turnover.

“Some key obligations for affected businesses include ensuring that your business has an up-to-date policy on your handling of credit information and that the policy is easily accessible and contains information about a number of mandatory matters,” Mr Sweeney said. “And notifying individuals of certain credit information handling matters before collecting their credit information.”

Mr Sweeney said until last year, privacy compliance was seen by many businesses as a toothless tiger.

“However, given the significant penalties that are now on the cards for non-compliance, businesses should ensure that they are aware of their obligations under the Privacy Act and make positive steps towards complying with their obligations or face hefty penalties.”

www.cgw.com.au

 

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Comcare self-insurance licence change saves money

EXTRA >> EMPLOYMENT Minister Eric Abetz has welcomed a reform that will see businesses save more than $1 million a year which, he said, is better reinvested in workplace health and safety and jobs.

The Safety, Rehabilitation and Compensation Commission has extended the initial two-year licence period to up to eight years, and the four-year ongoing licence period also to up to eight years for licences under the Safety, Rehabilitation and Compensation Act. 

“This change means companies that self-insure through Comcare will have their licence periods extended and will therefore need to apply for licence extensions less frequently,” Senator Abetz said.

“This measure will cut the financial and red-tape burden for those self-insuring through Comcare by a total of $1.26 million a year.

“Businesses that self-insure in Comcare estimate that it costs between $80,000 and $100,000 to prepare a licence-extension application.

“Increasing the length of time that businesses hold their licences will save them time, effort and money.”

Companies successfully signing up to Comcare for the first time will be granted an eight-year rather than a two-year licence, and those seeking to extend existing arrangements will be granted an eight-year licence instead of a four-year one.

This reform will reduce the regulatory burden, remove the cost of licence extensions in years two and four, and push back the costs of audit until year eight as well as ensure safer workplaces.

www.comcare.gov.au

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ASIC hit by Senate criticism over ‘small’ multinationals

EXTRA >>

THE Senate Standing Committee on Economics heard damning criticisms of the Australian Securities and Investments Commission (ASIC) and Taxpayers Australia is highlighting ASIC’s poor handling of how multinational corporations represent themselves in Australia.

Senator Christine Milne’s probing of ASIC’s ‘check-and-rein’ protocols in October has produced worrying insights, according to Taxpayers Australia, which also submitted to the enquiry “at worst, the government regulator has an ineffectual standing among multinational corporations, who are playing fast and loose with basic compliance and self-determination processes”.

Taxpayers Australia’s head of tax, Mark Chapman said ASIC’s primary misstep — highlighted by Sen. Milne in session — was best summarised as “an inability to regulate Australian subsidiaries operating as part of larger, overseas parent companies”. 

ASIC’s current Class Orders only require large organisations and large Australian-based groups to submit financial statements. 

“The rub is this:  businesses self-determine their size, and thus their eligibility to report to ASIC,” Mr Chapman said. “Self-determination requires an honour-based compliance standard. 

“Therefore less-than-honourable businesses can dodge regulation by determining themselves ‘small’ with little apparent fear of ASIC validation.”

Taxpayers Australia claims Facebook Australia “looks to have done this, being an Australian subsidiary of a larger overseas parent company”.

“Given the size of the Facebook global empire, questions need to be asked about Facebook Australia’s ‘small company’ self-determination,” Mr Chapman said. “Its practices are sobering proof an overhaul is needed.”

In a submission to the Senate Standing Committee on Economics, Taxpayers Australia has sought to tackle the legislative grey area Facebook Australia – and Facebook US, being the parent – may be operating in.

“The fact remains, ASIC has not defined large multinational group disclosure arrangements,” Mr Chapman said. “Taxpayers Australia notes that under current law, ASIC’s existing Class Orders do not require multinational corporations to submit financial statements in respect of their Australian subsidiaries.

“Therein lies the worrying likelihood of ASIC missing out on critical financial information.”

Mr Chapman said Taxpayers Australia advocated it essential that not only ASIC follow the law in relation to self-determination, but that the law was appropriate in the first place.

“And clearly it isn’t,” Mr Chapman said. “We’re not calling for over-regulation but clearly when the parent company of one of the world’s largest corporations is able to legitimately describe itself as small – with all the implications that carries for the amount of scrutiny it will receive by ASIC and later the Tax Office – there is something very wrong with the rules.”
Taxpayers Australia said its understanding was that the Australian Taxation Office (ATO) can request financial statements from relevant subsidiaries of foreign multinationals, but ASIC’s laws do not support any such procedures. 

“The two bodies should work in tandem,” Mr Chapman said. “As it is right now, any financial statements provided independently to the Tax Office would not be legally subject to audits by an independent third party, nor would they be need to be prepared in accordance with Chapter 2M of the Corporations Act 2001 (Cth).”

Taxpayers Australia is calling on the Senate Committee to clarify the extent to which ASIC consults with the ATO and other powers when formulating Class Orders. 

“The partnership of ASIC and the ATO, with respect to multinational compliance, must be seen to deliver clear legislative strength,” Taxpayers Australia said in a statement. “If it does not, the government must act to strengthen the law covering the  verification of self-determination processes.

“Proof the Tax Office is receiving quality information from foreign multinationals to aid ongoing compliance must be given, and ASIC must address glaring holes in Class Orders stipulating company self-determination criteria.”

www.taxpayer.com.au

 

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New pathway for mega wealthy migrants

EXTRA >>

NEW INVESTMENT attraction for Australia is the impetus behind expansion of schemes to attract wealthy migrants – and their capital – by the Australian Government.

Mullins Lawyers partner and registered migration agent, Tony Hogarth said the Premium Investor Visa (PIV) would be introduced from July 1, 2015. The PIV will allow an applicant to become a permanent resident in just 12 months by investing $15 million into complying investments – and importantly there will be no permanent residency requirement under the scheme.

This is a significant move, as is the increased involvement of Austrade in determining the investment eligibility criteria for both PIVs and Significant Investor Visas (SIVs), Mr Hogarth said.

“In addition to States and Territory governments, Austrade will play a more prominent role in SIVs through the nomination of SIV applicants,” Mr Hogarth said. “For PIV applicants, Austrade will become the sole nominating entity.”

The visa schemes are expected to link back to the Federal Government’s recently released the Industry Innovation and Competitiveness Agenda.

The SIV scheme was released in November 2012 by the previous Labor Government. It required migrants to invest $5 million into complying investments in Australia for a minimum period of four years. With the new provisions, the Coalition Government appeared to be strengthening the program, while dealing with anomalies.

“In order to attract more high net worth individuals, improvements in the exiting SIV will be made by streamlining the processing time, strengthening its integrity measures and further promoting the program globally,” Mr Hogarth said.

“With the implementation of the new PIV, Australia will be able to better compete with other countries and to maintain its position as one of the leading destinations for wealthy migrants.”

Mr Hogarth said the government also proposed to implement changes to the 457 Visa regime to make it easier for employers to engage skilled overseas workers, and specifics were expected to come through in coming months.

www.mullinslawyers.com.au

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